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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. An IPO that has met certain
Qualified IPO
Preferred Stock
IPO(initial public offerings)
Preferred Stock
2. 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.
leverage buy-out(LBO)
Venture Capital Financing
return on investment (ROI)
buyout
3. 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.
Common Stock
term sheet
Senior Stock
liquidation
4. The company or entity into which a fund invests directly.
Corporation (Limited liability and taxation)
Equity
portfolio compaay
management buy-out (MBO)
5. The internal rate of return on an investment.
Series A Preferred Stock
PPM
return on investment (ROI)
Internal Rate of Return
6. 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.
management buy-in (MBI)
portfolio compaay
Restricted Shares
Preferred Stock
7. Investments by a private equity fund in a publicly traded company - usually at a discount.
institutional investors
private investment in public equities (PIPE)
Common Stock
Liquidity Event
8. 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.).
IPO (Initial Public Offering)
institutional investors
Private Equity
Preferred Stock
9. 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
Pre-Money Valuation
executive summary
Series A Preferred Stock
Anti-Dilution Protections
10. A study of the background and financial reliability of the company - management team and industry.
No Shop/Confidentiality
Liquidation
Due Diligence
Pre-money valuation
11. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
going private
Elevator Pitch
Liquidity Event
12. 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.
liquidation
bridge loans
Elevator Pitch
buyout
13. The way you buy stock
Book Value
fund of funds
PPM
Subordinated Debt
14. 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.
Closing
lock-up period
exit route
return on investment (ROI)
15. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Pre-Money Valuation
going private
turnaround
16. 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
Limited Partner
capital under management
lead investor
Book Value
17. The method by which an investor will realize an investment.
Burn Rate
S Corporation
Limited Partnership Agreement
exit route
18. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Lead Investor
NDA (Non-disclosure agreement)
Common Stock
19. 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.
going private
executive summary
Common Stock
management buy-out (MBO)
20. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Elevator Pitch
return on investment (ROI)
Business Summary
benchmarks
21. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
due diligence
Term Sheet
raising capital
capital gain
22. 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
C Corporation
IRR
Term Sheet
Capitalization Table
23. Don't talk to the market about the company
Confidentiality
Limited Partnership Agreement
acquisition
Series A Preferred Stock
24. A business owned by stockholders who share in its profits but are not personally responsible for its debts
small business investment companies (SBIC)
Corporation (Limited liability and taxation)
Bootstrapping
Angel Financing
25. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
IRR
Capital Call 'Drawdown'
buyout
26. Term sheet for equity offering
Term Sheet
Liquidation Preference
Market Capitalization
Initial Public Offering
27. 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.
Term Sheet
equity offerings
Subordinated Debt
Outstanding Stock
28. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
exit route
lead investor
Term Sheet
29. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Common Stock
Conversion Rights
C Corporation
syndication
30. 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
Preferred Stock
fund of funds
S Corporation
Term Sheet
31. 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
institutional investors
Cash-out election
lock-up period
series a preferred stock
32. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
closing
series a preferred stock
Anti-Dilution Protections
executive summary
33. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
private investment in public equities (PIPE)
NDA (Non-disclosure agreement)
Business Plan
series a preferred stock
34. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Anti-Dilution Protections
private investment in public equities (PIPE)
Corporation (Limited liability and taxation)
35. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
Voting Rights
Post-money
bridge loans
36. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
Subordinated Debt
Lead Investor
Confidentiality
37. Date the LP's subscription is effective and they become partner
Common Stock
Closing
capital under management
IRR
38. 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
Dividends
due diligence
Pre-money valuation
Pre-Money Valuation
39. 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.
Post-money
Qualified IPO
lead investor
recapitalization
40. 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
Lead Investor
syndication
institutional investors
Elevator Pitch
41. 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
Bootstrapping
Pre-Money Valuation
lead investor
Anti-Dilution Protections
42. 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.
Bootstrapping
Business Summary
Conversion Rights
Bridge Financing
43. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Stock Price Agreement
secondary public offering
Bridge Financing
Liquidity Event
44. 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
Private Equity
going private
raising capital
follow-on
45. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
PPM
Term Sheet
IPO (Initial Public Offering)
executive summary
46. 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.
syndication
capital gain
Angel Financing
Pre-money valuation
47. 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
turnaround
Bootstrapping
Venture Capitalist
minority enterprise small business investment companies (MESBICS)
48. Letter of intent summarizing the key legal and financial terms
Conversion Rights
Cash-out election
Term Sheet
C Corporation
49. Pre-money valuation plus the amount invested in the latest round
exit
Post-money
Dividends
fund of funds
50. The amount of this available to a management team for venture investments.
PPM
capital under management
Liquidation Preference
return on investment (ROI)