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. Selling an interest in your business to an outside party to raise money.






2. 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






3. 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






4. 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






5. Don't talk to the market about the company






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






7. 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.






8. 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.






9. 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






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






11. How much the company is worth before an investment






12. 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.






13. 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.






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






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






16. 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.






17. 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.






18. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.






19. 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) ...






20. 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






21. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s






22. 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.).






23. 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 -






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






25. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






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






27. The rate of return or profit that an investment is expected to earn.






28. 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






29. 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






30. 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


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






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






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. The rate at which a company expends net cash over a certain period - usually a month.






35. 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






36. 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






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






38. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






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






40. 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.






41. 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






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






43. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






44. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






45. 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






46. 'I will buy stock at price we negotiate'






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






48. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






49. This refers to a synopsis of the key points of a business plan.






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