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Test your basic knowledge |
Venture Capital
Start Test
Study First
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. The rate at which a company expends net cash over a certain period - usually a month.
Limited Partnership Agreement
seed capital
Burn Rate
Venture Capitalist
2. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.
lock-up period
IRR
Cash-out election
Term Sheet
3. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Equity
corporate venturing
Senior Stock
Anti-Dilution Protections
4. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.
institutional investors
equity financing
Bootstrapping
Preferred Stock
5. 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
small business investment companies (SBIC)
private equity
Common Equity
Qualified IPO
6. 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
syndication
private equity
Corporation (Limited liability and taxation)
PPM
7. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
portfolio compaay
Membership Interest
Angel Financing
Conversion Rights
8. How much the company is worth before an investment
Anti-Dilution Protections
Business Plan
Membership Interest
Pre-Money Valuation
9. Issue of shares of a company to the public by the company (directly) for the first time.
Preferred Stock
Bridge Financing
IPO(initial public offerings)
Venture Capitalist
10. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
mezzanine financing
acquisition
NDA (Non-disclosure agreement)
Business Summary
11. 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
Venture Capitalist
Capitalization Table
Restricted Shares
Series A Preferred Stock
12. Partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment
Deal Structure
liquidation
Limited Partner
Market Capitalization
13. The maximum amount of cash that a partner is required to contribute under the terms
Seed Money
Lead Investor
Capital Commitment
Preferred Stock
14. 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
Dividends
Liquidity Event
Confidentiality
Post-Money Valuation
15. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Venture Capital Financing
portfolio compaay
Preferred Stock
16. An investment vehicle designed to invest in a diversified group of investment funds.
Business Summary
exit route
Cash-out election
fund of funds
17. 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.
recapitalization
follow-on
Preferred Stock
private investment in public equities (PIPE)
18. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
lock-up period
Warrants
private equity
venture capital
19. 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.
Pre-money valuation
Capitalization Table
limited partnerships
management buy-out (MBO)
20. 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
Capital Commitment
portfolio compaay
Elevator Pitch
Membership Interest
21. Don't talk to the market about the company
liquidation
Confidentiality
Term Sheet
Venture Capitalist
22. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
follow-on
turnaround
Preferred Stock
Liquidity Event
23. Assets are subject to double taxation - Unlimited number of investors
Limited Partner
C Corporation
return on investment (ROI)
Confidentiality
24. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Closing
Capital Call 'Drawdown'
Restricted Stock
angel investors
25. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c
Corporation (Limited liability and taxation)
management buy-in (MBI)
Pre-Money Valuation
Capitalization Table
26. 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
Business Plan
Book Value
seed capital
angel investors
27. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Pre-money valuation
Common Stock
management buy-in (MBI)
Internal Rate of Return
28. The company or entity into which a fund invests directly.
leverage buy-out(LBO)
Deal Structure
Qualified IPO
portfolio compaay
29. The method by which an investor will realize an investment.
Due Diligence
exit route
Capital Commitment
mezzanine financing
30. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project
Lead Investor
Liquidation
Confidentiality
Pre-Money Valuation
31. Document between general and limited partnership of each fund spells out details of the partnership.
recapitalization
Due Diligence
Limited Partnership Agreement
closing
32. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Business Plan
Outstanding Stock
Adjusted Book Value
debt financing
33. 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.
Preferred Stock
Common Equity
Restricted Shares
liquidation
34. 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
small business investment companies (SBIC)
Business Plan
Initial Public Offering
exit
35. An IPO that has met certain
Qualified IPO
syndication
Equity
turnaround
36. A security with limits on its transferability. Usually issued in connection with a private placement
Capital
Capital Commitment
small business investment companies (SBIC)
Restricted Stock
37. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.
Bootstrapping
Voting Rights
Seed Money
Conversion Rights
38. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
bridge loans
small business investment companies (SBIC)
equity offerings
39. 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
Capital Call 'Drawdown'
fund of funds
syndication
Market Capitalization
40. 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.).
institutional investors
Pre-Money Valuation
turnaround
Outstanding Stock
41. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
raising capital
Pre-money valuation
Common Stock
Venture Capital Financing
42. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
IPO (Initial Public Offering)
IRR
Term Sheet
Confidentiality
43. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet
Cash-out election
NDA (Non-disclosure agreement)
buyout
Business Plan
44. The internal rate of return on an investment.
small business investment companies (SBIC)
raising capital
return on investment (ROI)
Capitalization Table
45. Compound internal rate of return.
IRR
Voting Rights
seed capital
Lead Investor
46. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
follow-on
buyout
Bootstrapping
47. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.
follow-on
Senior Stock
IRR
executive summary
48. 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.
Business Summary
equity financing
Bridge Financing
minority enterprise small business investment companies (MESBICS)
49. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
minority enterprise small business investment companies (MESBICS)
equity offerings
No Shop/Confidentiality
secondary public offering
50. 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
capital gain
Stock Price Agreement
Preferred Stock
Capitalization Table