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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 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
Market Capitalization
IPO (Initial Public Offering)
Membership Interest
Capital
2. The party that manages a limited partnership and is liable for the debts of the company
Elevator Pitch
lead investor
General Partner (GP)
portfolio compaay
3. Investments by a private equity fund in a publicly traded company - usually at a discount.
IPO(initial public offerings)
private investment in public equities (PIPE)
capital under management
Private Equity
4. 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
due diligence
Anti-Dilution Protections
capital gain
going private
5. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...
Venture Capitalist
Initial Public Offering
Preferred Stock
Liquidity Event
6. 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
return on investment (ROI)
Voting Rights
series a preferred stock
Capital Commitment
7. Assets are subject to double taxation - Unlimited number of investors
Lead Investor
Stock Price Agreement
C Corporation
follow-on
8. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
follow-on
Restricted Shares
Business Plan
9. The total value of the company immediately prior to the latest round of financing
Bridge Financing
Pre-money valuation
Post-money
Elevator Pitch
10. 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
bridge loans
Preferred Stock
Dividends
Elevator Pitch
11. The rate at which a company expends net cash over a certain period - usually a month.
Voting Rights
Burn Rate
portfolio compaay
equity offerings
12. 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
IPO (Initial Public Offering)
debt financing
bridge loans
Private Equity
13. Don't talk to the market about the company
mezzanine financing
corporate venturing
Liquidation Preference
Confidentiality
14. An IPO that has met certain
Pre-Money Valuation
angel investors
buyout
Qualified IPO
15. This refers to a synopsis of the key points of a business plan.
executive summary
Conversion Rights
private equity
Bootstrapping
16. 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
minority enterprise small business investment companies (MESBICS)
Capital Commitment
Seed Money
Closing
17. 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.
benchmarks
Restricted Stock
Outstanding Stock
IPO(initial public offerings)
18. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
bridge loans
capital gain
acquisition
capital under management
19. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Seed Money
Subordinated Debt
fund of funds
minority enterprise small business investment companies (MESBICS)
20. The equity ownership in a corporation. Also has basic voting rights
turnaround
Adjusted Book Value
Common Stock
portfolio compaay
21. 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
Capital Commitment
PPM
debt financing
Cash-out election
22. 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
angel investors
Limited Partner
secondary public offering
Bootstrapping
23. The amount of this available to a management team for venture investments.
Confidentiality
capital under management
Liquidation Preference
limited partnerships
24. No double tax - Limited number of investors
S Corporation
equity financing
Cash-out election
Anti-Dilution Protections
25. 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.
Common Equity
benchmarks
term sheet
Outstanding Stock
26. 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.
going private
acquisition
term sheet
Business Plan
27. 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
Senior Stock
Due Diligence
private equity
return on investment (ROI)
28. 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
Burn Rate
Venture Capital Financing
executive summary
Common Stock
29. The method by which an investor will realize an investment.
exit route
Post-money
syndication
Series A Preferred Stock
30. The rate of return or profit that an investment is expected to earn.
Term Sheet
benchmarks
Internal Rate of Return
Due Diligence
31. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Post-Money Valuation
limited partnerships
going private
32. The company or entity into which a fund invests directly.
portfolio compaay
IPO (Initial Public Offering)
small business investment companies (SBIC)
buyout
33. This refers to obtaining capital from investors or venture capital sources.
leverage buy-out(LBO)
Subordinated Debt
turnaround
raising capital
34. 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
Dividends
buyout
benchmarks
acquisition
35. The value at which an asset is carried on a balance sheet (the cost of the item)
Cash-out election
Lead Investor
Angel Financing
Book Value
36. 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.
Elevator Pitch
turnaround
going private
Capital Call 'Drawdown'
37. How you get out
NDA (Non-disclosure agreement)
Cash-out election
Venture Capitalist
Liquidation Preference
38. 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
recapitalization
corporate venturing
Angel Financing
debt financing
39. Date the LP's subscription is effective and they become partner
fund of funds
term sheet
Angel Financing
Closing
40. 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.
Venture Capital Financing
lock-up period
Term Sheet
Limited Partnership Agreement
41. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Membership Interest
General Partner (GP)
Series A Preferred Stock
due diligence
42. 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
executive summary
limited partnerships
Business Plan
Post-Money Valuation
43. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Preferred Stock
Liquidity Event
Stock Price Agreement
Cash-out election
44. 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.
Conversion Rights
Confidentiality
Capital Commitment
mezzanine financing
45. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.
Restricted Stock
venture capital
corporate venturing
Bootstrapping
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
Subordinated Debt
Post-Money Valuation
Conversion Rights
47. 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.
raising capital
Venture Capital Financing
Liquidity Event
Business Plan
48. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
management buy-in (MBI)
bridge loans
Book Value
Angel Financing
49. 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.
PPM
Warrants
follow-on
Post-Money Valuation
50. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
management buy-out (MBO)
limited partnerships
Liquidation Preference
Warrants