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 sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






2. 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






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






4. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






5. How much the company is worth before an investment






6. 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






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






8. 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.






9. 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) ...






10. 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






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






12. The value at which an asset is carried on a balance sheet (the cost of the item)






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






14. 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.).






15. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






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






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






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






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






20. 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






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






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






23. 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.






24. 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.






25. 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






26. A study of the background and financial reliability of the company - management team and industry.






27. 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






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






29. A security with limits on its transferability. Usually issued in connection with a private placement






30. How you get to vote






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






32. Investments by a private equity fund in a publicly traded company - usually at a discount.






33. The amount of this available to a management team for venture investments.






34. 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






35. 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






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






37. 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






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






39. 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.






40. 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.






41. 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






42. Document between general and limited partnership of each fund spells out details of the partnership.






43. 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






44. Compound internal rate of return.






45. 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






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






47. 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






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. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






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