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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. No double tax - Limited number of investors
Liquidation
angel investors
Preferred Stock
S Corporation
2. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Liquidation Preference
NDA (Non-disclosure agreement)
seed capital
Preferred Stock
3. 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
Subordinated Debt
angel investors
Elevator Pitch
S Corporation
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.
due diligence
syndication
Venture Capital Financing
Series A Preferred Stock
5. The method by which an investor will realize an investment.
exit route
Closing
management buy-out (MBO)
Seed Money
6. 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 -
Private Equity
limited partnerships
Term Sheet
Deal Structure
7. 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.
raising capital
mezzanine financing
C Corporation
liquidation
8. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Common Stock
leverage buy-out(LBO)
Angel Financing
Preferred Stock
9. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
going private
turnaround
Capital
Subordinated Debt
10. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
Senior Stock
Venture Capital Financing
IRR
11. The residual ownership in a company like a corporation or LLC 51%=control
private equity
Corporation (Limited liability and taxation)
capital gain
Equity
12. This refers to a synopsis of the key points of a business plan.
Burn Rate
Bootstrapping
Term Sheet
executive summary
13. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Limited Partnership Agreement
Warrants
Post-Money Valuation
Common Stock
14. 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.
Capitalization Table
Common Stock
Term Sheet
lock-up period
15. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell
Private Equity
executive summary
C Corporation
Seed Money
16. Document between general and limited partnership of each fund spells out details of the partnership.
syndication
Limited Partnership Agreement
debt financing
Voting Rights
17. Don't talk to the market about the company
Confidentiality
Elevator Pitch
Liquidity Event
institutional investors
18. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
Corporation (Limited liability and taxation)
limited partnerships
C Corporation
19. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Angel Financing
Corporation (Limited liability and taxation)
Post-Money Valuation
buyout
20. 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
equity financing
Market Capitalization
secondary purchase
Common Stock
21. 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.
equity financing
minority enterprise small business investment companies (MESBICS)
Business Plan
portfolio compaay
22. The amount of this available to a management team for venture investments.
going private
buyout
capital under management
syndication
23. 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.
Bridge Financing
Preferred Stock
Anti-Dilution Protections
Preferred Stock
24. 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.
corporate venturing
due diligence
term sheet
NDA (Non-disclosure agreement)
25. 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
Common Stock
Capital Call 'Drawdown'
Bootstrapping
closing
26. An IPO that has met certain
Qualified IPO
private equity
exit
Capital
27. 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
Stock Price Agreement
Restricted Shares
Venture Capital Financing
Cash-out election
28. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
exit route
leverage buy-out(LBO)
Seed Money
29. 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
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
secondary public offering
Seed Money
Capital
Capital Call 'Drawdown'
31. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Pre-money valuation
Angel Financing
Private Equity
management buy-out (MBO)
32. 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
executive summary
buyout
Due Diligence
Lead Investor
33. The total value of the company immediately prior to the latest round of financing
Dividends
private equity
going private
Pre-money valuation
34. 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
debt financing
turnaround
Initial Public Offering
Deal Structure
35. 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
minority enterprise small business investment companies (MESBICS)
exit route
Business Plan
Deal Structure
36. 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
Venture Capital Financing
Business Summary
Pre-Money Valuation
S Corporation
37. 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.
Book Value
Closing
Deal Structure
debt financing
38. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Capital Commitment
exit
closing
Internal Rate of Return
39. 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
Business Summary
Post-Money Valuation
leverage buy-out(LBO)
PPM
40. Investments by a private equity fund in a publicly traded company - usually at a discount.
return on investment (ROI)
going private
recapitalization
private investment in public equities (PIPE)
41. Assets are subject to double taxation - Unlimited number of investors
portfolio compaay
Preferred Stock
mezzanine financing
C Corporation
42. 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
management buy-out (MBO)
Capital Commitment
Common Stock
Venture Capitalist
43. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
going private
Internal Rate of Return
Capital
Adjusted Book Value
44. The maximum amount of cash that a partner is required to contribute under the terms
Series A Preferred Stock
Preferred Stock
term sheet
Capital Commitment
45. Compound internal rate of return.
Stock Price Agreement
IRR
Equity
Post-Money Valuation
46. The internal rate of return on an investment.
return on investment (ROI)
PPM
IPO(initial public offerings)
portfolio compaay
47. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Confidentiality
Subordinated Debt
Anti-Dilution Protections
48. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Anti-Dilution Protections
equity offerings
Initial Public Offering
acquisition
49. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
angel investors
Senior Stock
Term Sheet
Capitalization Table
50. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
series a preferred stock
seed capital
mezzanine financing