Test your basic knowledge |

Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment


2. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo






3. The first round of stock offered during the seed or early stage round by a portfolio company to the venture investor or fund. This stock is convertible into common stock in certain cases such as an IPO or the sale of the company. Later rounds of pref






4. The party that manages a limited partnership and is liable for the debts of the company






5. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi






6. The equity ownership in a corporation. Also has basic voting rights






7. Document between general and limited partnership of each fund spells out details of the partnership.






8. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






9. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






10. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






11. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






12. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






13. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






14. Assets are subject to double taxation - Unlimited number of investors






15. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation






16. Letter of intent summarizing the key legal and financial terms






17. Pre-money valuation plus the amount invested in the latest round






18. The way you buy stock






19. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






20. The method by which an investor will realize an investment.






21. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public






22. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






23. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






24. The amount of this available to a management team for venture investments.






25. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid






26. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






27. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






28. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no






29. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






30. Date the LP's subscription is effective and they become partner






31. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






32. Investments by a private equity fund in a publicly traded company - usually at a discount.






33. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






34. The practice of a large company taking a minority equity position in a smaller company in a related field.






35. A business owned by stockholders who share in its profits but are not personally responsible for its debts






36. A form of equity ownership in a corporation that contains preferences over common stock - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights






37. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






38. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.






39. How much the company is worth before an investment






40. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






41. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






42. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






43. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






44. An investment vehicle designed to invest in a diversified group of investment funds.






45. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






46. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






47. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






48. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






49. Money used to purchase equity-based interest in a new or existing company. A venture capitalists return usually comes from preferred stock - a share of profits - royalties or capital appreciation of common stock. Most venture capitalists look for c






50. The maximum amount of cash that a partner is required to contribute under the terms