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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. 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
bridge loans
private investment in public equities (PIPE)
IPO (Initial Public Offering)
acquisition
2. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Confidentiality
Warrants
NDA (Non-disclosure agreement)
raising capital
3. Cannot get other outside investors-No Shop
leverage buy-out(LBO)
capital gain
No Shop/Confidentiality
private investment in public equities (PIPE)
4. 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 -
limited partnerships
Common Stock
debt financing
General Partner (GP)
5. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Private Equity
Subordinated Debt
Bridge Financing
small business investment companies (SBIC)
6. 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
Private Equity
Capitalization Table
Internal Rate of Return
corporate venturing
7. 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
8. 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
Due Diligence
venture capital
Venture Capitalist
C Corporation
9. Pre-money valuation plus the amount invested in the latest round
Senior Stock
fund of funds
Post-money
Pre-money valuation
10. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Subordinated Debt
leverage buy-out(LBO)
Post-Money Valuation
management buy-in (MBI)
11. This refers to obtaining capital from investors or venture capital sources.
raising capital
IPO(initial public offerings)
Common Stock
return on investment (ROI)
12. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
debt financing
leverage buy-out(LBO)
institutional investors
13. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Angel Financing
closing
Liquidation
capital under management
14. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Cash-out election
Deal Structure
lead investor
15. 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
series a preferred stock
seed capital
Adjusted Book Value
Pre-Money Valuation
16. The practice of a large company taking a minority equity position in a smaller company in a related field.
Preferred Stock
corporate venturing
Pre-money valuation
secondary purchase
17. 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
going private
term sheet
Market Capitalization
Confidentiality
18. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Conversion Rights
Lead Investor
Business Summary
Anti-Dilution Protections
19. The value at which an asset is carried on a balance sheet (the cost of the item)
Restricted Shares
Book Value
Confidentiality
Initial Public Offering
20. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
IRR
Adjusted Book Value
General Partner (GP)
Common Equity
21. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Bridge Financing
Conversion Rights
NDA (Non-disclosure agreement)
minority enterprise small business investment companies (MESBICS)
22. 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
Common Equity
due diligence
exit route
23. 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.
Common Stock
Common Stock
executive summary
lock-up period
24. A business owned by stockholders who share in its profits but are not personally responsible for its debts
mezzanine financing
turnaround
leverage buy-out(LBO)
Corporation (Limited liability and taxation)
25. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Common Stock
term sheet
due diligence
Business Plan
26. 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
raising capital
closing
benchmarks
turnaround
27. 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
Cash-out election
Liquidation Preference
NDA (Non-disclosure agreement)
Market Capitalization
28. How much the company is worth before an investment
Private Equity
Post-money
Deal Structure
Pre-Money Valuation
29. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
Subordinated Debt
due diligence
Adjusted Book Value
30. 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.
Due Diligence
management buy-out (MBO)
executive summary
Outstanding Stock
31. 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
recapitalization
Bootstrapping
management buy-in (MBI)
seed capital
32. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Anti-Dilution Protections
Common Equity
secondary purchase
33. 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
liquidation
Restricted Shares
Pre-Money Valuation
venture capital
34. 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.
Elevator Pitch
Deal Structure
angel investors
seed capital
35. 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.).
executive summary
Bootstrapping
institutional investors
secondary purchase
36. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
Confidentiality
Corporation (Limited liability and taxation)
private equity
37. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Senior Stock
due diligence
Adjusted Book Value
management buy-in (MBI)
38. 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.
Deal Structure
Preferred Stock
C Corporation
Liquidation
39. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Pre-Money Valuation
buyout
NDA (Non-disclosure agreement)
angel investors
40. 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
Limited Partner
Liquidation
IPO(initial public offerings)
Common Stock
41. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Closing
equity financing
liquidation
42. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Stock Price Agreement
buyout
Pre-Money Valuation
Market Capitalization
43. 'I will buy stock at price we negotiate'
Subordinated Debt
due diligence
Stock Price Agreement
Outstanding Stock
44. 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.
Capital Call 'Drawdown'
acquisition
capital gain
follow-on
45. Selling an interest in your business to an outside party to raise money.
secondary purchase
Adjusted Book Value
equity financing
Business Plan
46. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
follow-on
management buy-in (MBI)
Liquidation Preference
Preferred Stock
47. Letter of intent summarizing the key legal and financial terms
series a preferred stock
Pre-Money Valuation
Term Sheet
Adjusted Book Value
48. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
small business investment companies (SBIC)
Liquidity Event
Market Capitalization
49. An IPO that has met certain
secondary public offering
Liquidity Event
closing
Qualified IPO
50. Date the LP's subscription is effective and they become partner
General Partner (GP)
Closing
Preferred Stock
Capital Call 'Drawdown'