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






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






3. 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






4. 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.






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






6. 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.






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






8. 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.






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






10. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






12. 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






13. 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.






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






15. 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.






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.).






17. Don't talk to the market about the company






18. 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






19. 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.






20. This refers to a synopsis of the key points of a business plan.






21. 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.






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. 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






24. 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






25. The rate at which a company expends net cash over a certain period - usually a month.






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






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






28. Date the LP's subscription is effective and they become partner






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






30. 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






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






32. 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.






33. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






34. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






35. Selling an interest in your business to an outside party to raise money.






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






37. 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






38. The residual ownership in a company like a corporation or LLC 51%=control






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






40. Term sheet for equity offering






41. 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.






42. The total value of the company immediately prior to the latest round of financing






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






44. 'I will buy stock at price we negotiate'






45. 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






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






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






48. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






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