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. Cannot get other outside investors-No Shop






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






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






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






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. 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






7. 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.






8. 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






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






10. 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






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






12. 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.






13. 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






14. 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






15. 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.






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






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






18. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






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






20. This refers to obtaining capital from investors or venture capital sources.






21. 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






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






23. 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.






24. 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






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






26. 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.






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






28. 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.






29. A business owned by stockholders who share in its profits but are not personally responsible for its debts






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






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






32. The practice of a large company taking a minority equity position in a smaller company in a related field.






33. 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






34. 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






35. 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






36. 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






37. 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






38. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






39. 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.






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






41. 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.






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






43. 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.).






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






45. The method by which an investor will realize an investment.






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






47. How you get out






48. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






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






50. How much the company is worth before an investment