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






2. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






3. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






4. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






5. How much the company is worth before an investment






6. How you get to vote






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






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






9. 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






10. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






11. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






12. 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






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






14. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






16. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






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






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






19. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






20. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






21. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






22. The residual ownership in a company like a corporation or LLC 51%=control






23. 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






24. 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






25. 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






26. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the






27. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






28. 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






29. How you get out






30. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






31. A study of the background and financial reliability of the company - management team and industry.






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






33. 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.






34. 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.






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






36. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






37. 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.






38. 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






39. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






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






41. 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






42. Issue of shares of a company to the public by the company (directly) for the first time.






43. Cannot get other outside investors-No Shop






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






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






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






47. 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.






48. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






49. 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


50. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).