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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. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Private Equity
S Corporation
capital gain
portfolio compaay
2. 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.
secondary purchase
S Corporation
syndication
angel investors
3. The total value of the company immediately prior to the latest round of financing
Angel Financing
term sheet
Pre-money valuation
Capital Commitment
4. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Anti-Dilution Protections
Business Summary
buyout
IPO(initial public offerings)
5. 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
executive summary
fund of funds
debt financing
Restricted Stock
6. 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
mezzanine financing
Membership Interest
Anti-Dilution Protections
7. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally
Pre-Money Valuation
Liquidation Preference
syndication
Capital Call 'Drawdown'
8. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Private Equity
Common Stock
Pre-money valuation
9. 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.
Deal Structure
turnaround
Common Stock
Membership Interest
10. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Private Equity
Preferred Stock
benchmarks
11. Assets are subject to double taxation - Unlimited number of investors
Venture Capitalist
benchmarks
C Corporation
exit route
12. The residual ownership in a company like a corporation or LLC 51%=control
Equity
return on investment (ROI)
Liquidity Event
going private
13. A business owned by stockholders who share in its profits but are not personally responsible for its debts
recapitalization
secondary purchase
Corporation (Limited liability and taxation)
Liquidity Event
14. The practice of a large company taking a minority equity position in a smaller company in a related field.
Restricted Stock
syndication
corporate venturing
Capital Call 'Drawdown'
15. The value at which an asset is carried on a balance sheet (the cost of the item)
Term Sheet
Book Value
lock-up period
Series A Preferred Stock
16. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Anti-Dilution Protections
Liquidation Preference
Voting Rights
17. Date the LP's subscription is effective and they become partner
Closing
Limited Partner
seed capital
Dividends
18. 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
No Shop/Confidentiality
C Corporation
bridge loans
angel investors
19. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
equity financing
term sheet
Angel Financing
raising capital
20. No double tax - Limited number of investors
Capital Commitment
raising capital
seed capital
S Corporation
21. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
benchmarks
Adjusted Book Value
General Partner (GP)
seed capital
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
Restricted Stock
NDA (Non-disclosure agreement)
Cash-out election
Term Sheet
23. 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
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
Seed Money
equity financing
Term Sheet
Stock Price Agreement
25. 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.
Market Capitalization
term sheet
Capital Call 'Drawdown'
management buy-out (MBO)
26. 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
Outstanding Stock
Post-Money Valuation
Market Capitalization
27. 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
Warrants
Preferred Stock
benchmarks
Business Plan
28. 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
IPO(initial public offerings)
Outstanding Stock
equity financing
29. 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.
Preferred Stock
Burn Rate
going private
Initial Public Offering
30. 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.
Burn Rate
bridge loans
mezzanine financing
turnaround
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
benchmarks
private equity
Capital Call 'Drawdown'
IPO (Initial Public Offering)
32. 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.
term sheet
Deal Structure
Post-money
secondary public offering
33. A study of the background and financial reliability of the company - management team and industry.
Venture Capital Financing
Post-Money Valuation
Due Diligence
C Corporation
34. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
capital under management
acquisition
Bridge Financing
fund of funds
35. 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
private investment in public equities (PIPE)
small business investment companies (SBIC)
benchmarks
Preferred Stock
36. 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
Series A Preferred Stock
Restricted Stock
Dividends
Post-Money Valuation
37. 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
Business Summary
Common Stock
Initial Public Offering
Series A Preferred Stock
38. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Liquidation Preference
Anti-Dilution Protections
Preferred Stock
angel investors
39. This refers to a synopsis of the key points of a business plan.
Angel Financing
equity offerings
turnaround
executive summary
40. 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.
Corporation (Limited liability and taxation)
lock-up period
lead investor
minority enterprise small business investment companies (MESBICS)
41. 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.
recapitalization
Series A Preferred Stock
Business Plan
follow-on
42. Investments by a private equity fund in a publicly traded company - usually at a discount.
Bootstrapping
Pre-Money Valuation
private investment in public equities (PIPE)
follow-on
43. How you get to vote
Voting Rights
private investment in public equities (PIPE)
Business Plan
private equity
44. 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
follow-on
institutional investors
Lead Investor
Common Equity
45. The amount of this available to a management team for venture investments.
Senior Stock
Bootstrapping
Market Capitalization
capital under management
46. 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
Elevator Pitch
Senior Stock
Voting Rights
Venture Capitalist
47. 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.
Outstanding Stock
Cash-out election
going private
mezzanine financing
48. The equity ownership in a corporation. Also has basic voting rights
Voting Rights
Internal Rate of Return
Book Value
Common Stock
49. 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
seed capital
Liquidity Event
Liquidation Preference
lock-up period
50. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
Outstanding Stock
corporate venturing
Limited Partner