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. 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.






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






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






4. 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






5. Cannot get other outside investors-No Shop






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






7. 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






8. 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






9. 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.






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






11. 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.






12. An IPO that has met certain






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






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






15. 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






16. 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.






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






18. 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.






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






20. 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






21. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






22. 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






23. How you get out






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






25. 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






26. 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






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






28. 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.






29. 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.






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






31. 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) ...






32. 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.






33. The total value of the company immediately prior to the latest round of financing






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






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






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






37. 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.






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






39. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






40. 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.






41. 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.






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






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






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






45. 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






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






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






48. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






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






50. 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