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. 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.






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






3. 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






4. 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.






5. Assets are subject to double taxation - Unlimited number of investors






6. 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






7. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






8. 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.






9. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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






11. An IPO that has met certain






12. 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






13. 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






14. 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.






15. 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






16. Compound internal rate of return.






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






18. 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.






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






20. 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.






21. How much the company is worth before an investment






22. 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






23. The company or entity into which a fund invests directly.






24. The party that manages a limited partnership and is liable for the debts of the company






25. 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






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






27. Term sheet for equity offering






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






29. 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






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






31. 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


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






33. 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






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






35. No double tax - Limited number of investors






36. How you get out






37. 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






38. Pre-money valuation plus the amount invested in the latest round






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






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






41. 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






42. 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






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






44. 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






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






46. 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.).






47. 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






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






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






50. Letter of intent summarizing the key legal and financial terms