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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. The total value of the company immediately prior to the latest round of financing
Closing
angel investors
Pre-money valuation
Common Stock
2. 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.
angel investors
management buy-out (MBO)
Common Stock
Capital
3. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Seed Money
Lead Investor
buyout
equity financing
4. 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
return on investment (ROI)
IPO (Initial Public Offering)
follow-on
capital under management
5. The value at which an asset is carried on a balance sheet (the cost of the item)
private equity
Book Value
going private
return on investment (ROI)
6. This refers to obtaining capital from investors or venture capital sources.
raising capital
Burn Rate
exit
Capital Call 'Drawdown'
7. The company or entity into which a fund invests directly.
portfolio compaay
exit
term sheet
Internal Rate of Return
8. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
private investment in public equities (PIPE)
limited partnerships
Capital
9. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
closing
limited partnerships
Post-money
10. 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.
institutional investors
term sheet
Senior Stock
equity offerings
11. 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
corporate venturing
going private
Term Sheet
Business Plan
12. An investment vehicle designed to invest in a diversified group of investment funds.
Pre-money valuation
buyout
term sheet
fund of funds
13. 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.
Outstanding Stock
corporate venturing
Common Stock
Venture Capital Financing
14. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
Common Equity
buyout
secondary public offering
management buy-out (MBO)
15. 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
Capitalization Table
mezzanine financing
Limited Partnership Agreement
Liquidation Preference
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.).
Initial Public Offering
Closing
institutional investors
IRR
17. 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
portfolio compaay
benchmarks
acquisition
Deal Structure
18. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Qualified IPO
S Corporation
term sheet
exit
19. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
management buy-out (MBO)
Senior Stock
Market Capitalization
turnaround
20. This refers to a synopsis of the key points of a business plan.
Preferred Stock
executive summary
going private
Preferred Stock
21. 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.
NDA (Non-disclosure agreement)
exit route
PPM
mezzanine financing
22. 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
secondary public offering
Dividends
Membership Interest
Conversion Rights
23. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Common Equity
closing
S Corporation
Initial Public Offering
24. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Preferred Stock
Membership Interest
due diligence
25. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Cash-out election
return on investment (ROI)
limited partnerships
26. The practice of a large company taking a minority equity position in a smaller company in a related field.
Equity
corporate venturing
Confidentiality
going private
27. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Initial Public Offering
Term Sheet
exit route
equity offerings
28. Document between general and limited partnership of each fund spells out details of the partnership.
private equity
Pre-Money Valuation
Limited Partnership Agreement
lead investor
29. Date the LP's subscription is effective and they become partner
lead investor
venture capital
lock-up period
Closing
30. 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
Post-Money Valuation
acquisition
Conversion Rights
31. The method by which an investor will realize an investment.
Corporation (Limited liability and taxation)
Common Equity
portfolio compaay
exit route
32. 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
Burn Rate
Private Equity
lead investor
Cash-out election
33. Cannot get other outside investors-No Shop
Preferred Stock
Limited Partnership Agreement
Due Diligence
No Shop/Confidentiality
34. The party that manages a limited partnership and is liable for the debts of the company
Deal Structure
General Partner (GP)
Warrants
Series A Preferred Stock
35. 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.
benchmarks
Venture Capitalist
venture capital
acquisition
36. Selling an interest in your business to an outside party to raise money.
secondary purchase
equity financing
No Shop/Confidentiality
corporate venturing
37. 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
venture capital
Pre-money valuation
Preferred Stock
IRR
38. How you get to vote
Membership Interest
IPO(initial public offerings)
Outstanding Stock
Voting Rights
39. The way you buy stock
PPM
Book Value
acquisition
Restricted Stock
40. Don't talk to the market about the company
Confidentiality
capital gain
institutional investors
Term Sheet
41. 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
Conversion Rights
institutional investors
Preferred Stock
Internal Rate of Return
42. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Restricted Shares
series a preferred stock
IPO(initial public offerings)
management buy-in (MBI)
43. No double tax - Limited number of investors
Liquidity Event
acquisition
lock-up period
S Corporation
44. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
No Shop/Confidentiality
PPM
Stock Price Agreement
45. 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
follow-on
Restricted Shares
Liquidation Preference
institutional investors
46. 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
Restricted Shares
secondary public offering
lock-up period
47. Assets are subject to double taxation - Unlimited number of investors
Post-money
Membership Interest
Elevator Pitch
C Corporation
48. Issue of shares of a company to the public by the company (directly) for the first time.
Voting Rights
IPO(initial public offerings)
leverage buy-out(LBO)
angel investors
49. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t
angel investors
Liquidation Preference
exit
small business investment companies (SBIC)
50. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Business Summary
General Partner (GP)
Liquidation
institutional investors