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






2. 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.






3. Term sheet for equity offering






4. 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






5. 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.






6. 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






7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






8. 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






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






10. 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.






11. 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






12. 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.






13. 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) ...






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






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






16. 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.).






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






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






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






21. An IPO that has met certain






22. How you get out






23. 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.






24. 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.






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






26. 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






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






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






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






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






31. 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






32. 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






33. 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






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






35. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






37. 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






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






39. 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.






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






41. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






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






43. 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






44. The way you buy stock






45. 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.






46. 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.






47. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






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






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






50. Cannot get other outside investors-No Shop