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. The internal rate of return on an investment.






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






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






4. How you get to vote






5. 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






6. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






7. The rate of return or profit that an investment is expected to earn.






8. 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






9. 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






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






11. 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






12. 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






13. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






14. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






15. 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






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






17. 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.






18. 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.






19. An IPO that has met certain






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






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






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






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






25. 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.






26. 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) ...






27. 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.






28. 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.






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






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






31. How much the company is worth before an investment






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






33. 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






34. 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.






35. 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






36. 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






37. 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.






38. 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






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






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






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






42. 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.






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






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






45. Term sheet for equity offering






46. 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.






47. 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.






48. 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






49. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






50. 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