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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 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.
Pre-Money Valuation
Outstanding Stock
Private Equity
mezzanine financing
2. 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
Liquidation Preference
Voting Rights
Capitalization Table
Common Equity
3. 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
series a preferred stock
capital under management
Business Plan
capital gain
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.
Warrants
fund of funds
Deal Structure
syndication
5. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Internal Rate of Return
Private Equity
corporate venturing
due diligence
6. 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
liquidation
Common Stock
Confidentiality
Restricted Stock
7. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
liquidation
capital gain
Liquidation
going private
8. 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.
exit route
acquisition
capital under management
IPO(initial public offerings)
9. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
Common Stock
Term Sheet
series a preferred stock
10. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Pre-Money Valuation
executive summary
Confidentiality
11. Compound internal rate of return.
Series A Preferred Stock
IRR
Market Capitalization
Liquidity Event
12. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
lock-up period
private equity
Voting Rights
13. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Angel Financing
Closing
Business Summary
Cash-out election
14. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
IRR
closing
mezzanine financing
equity offerings
15. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
IPO (Initial Public Offering)
Preferred Stock
Due Diligence
management buy-in (MBI)
16. This refers to a synopsis of the key points of a business plan.
Capital
executive summary
lock-up period
Membership Interest
17. 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
Pre-Money Valuation
Post-money
capital gain
lead investor
18. The company or entity into which a fund invests directly.
Closing
syndication
portfolio compaay
closing
19. Selling an interest in your business to an outside party to raise money.
No Shop/Confidentiality
equity financing
lock-up period
exit route
20. 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.
turnaround
liquidation
Market Capitalization
management buy-in (MBI)
21. The method by which an investor will realize an investment.
Elevator Pitch
NDA (Non-disclosure agreement)
Common Stock
exit route
22. 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
IPO (Initial Public Offering)
Liquidation Preference
benchmarks
Burn Rate
23. 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
Restricted Stock
Burn Rate
Seed Money
Due Diligence
24. 'I will buy stock at price we negotiate'
Stock Price Agreement
IPO (Initial Public Offering)
syndication
Limited Partner
25. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
mezzanine financing
syndication
Restricted Stock
26. 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
debt financing
seed capital
Internal Rate of Return
Liquidation Preference
27. 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
Limited Partner
closing
exit
Capitalization Table
28. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T
buyout
Preferred Stock
small business investment companies (SBIC)
syndication
29. How you get to vote
limited partnerships
Conversion Rights
Business Plan
Voting Rights
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Book Value
private investment in public equities (PIPE)
Liquidation Preference
31. The residual ownership in a company like a corporation or LLC 51%=control
executive summary
Lead Investor
Equity
Cash-out election
32. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Membership Interest
Post-money
Warrants
Anti-Dilution Protections
33. The amount of this available to a management team for venture investments.
Initial Public Offering
Internal Rate of Return
capital under management
small business investment companies (SBIC)
34. How much the company is worth before an investment
buyout
Initial Public Offering
executive summary
Pre-Money Valuation
35. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
S Corporation
Corporation (Limited liability and taxation)
venture capital
36. 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
management buy-in (MBI)
Market Capitalization
Angel Financing
Pre-money valuation
37. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
mezzanine financing
Market Capitalization
IPO(initial public offerings)
38. 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.
Business Summary
Seed Money
Restricted Shares
lock-up period
39. 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) ...
Initial Public Offering
debt financing
acquisition
Lead Investor
40. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
recapitalization
Liquidity Event
Warrants
private investment in public equities (PIPE)
41. The internal rate of return on an investment.
return on investment (ROI)
Capital
Business Summary
due diligence
42. 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
Preferred Stock
Common Stock
Business Plan
Restricted Stock
43. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l
syndication
Dividends
bridge loans
IPO(initial public offerings)
44. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Equity
leverage buy-out(LBO)
Restricted Shares
Conversion Rights
45. 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.
Liquidity Event
follow-on
term sheet
Anti-Dilution Protections
46. Letter of intent summarizing the key legal and financial terms
Preferred Stock
due diligence
capital under management
Term Sheet
47. 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
Common Stock
follow-on
Deal Structure
venture capital
48. 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
Pre-money valuation
Internal Rate of Return
going private
executive summary
49. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Restricted Shares
Venture Capitalist
Closing
50. 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.
capital gain
going private
equity offerings
Bootstrapping