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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. 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






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






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






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.






5. 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) ...






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






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






8. 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.






9. How you get to vote






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






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






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






13. 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 -






14. 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.






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






16. 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.






17. 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.






18. 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






19. 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






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






21. 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.






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






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






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






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






26. 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.






27. How much the company is worth before an investment






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






29. The value at which an asset is carried on a balance sheet (the cost of the item)






30. 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






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






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






33. 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






34. 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


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






36. 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






37. 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






38. 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






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






40. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






41. 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






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






43. The company or entity into which a fund invests directly.






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






45. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






46. 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






47. 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.






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.






49. 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.






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