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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. 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
Venture Capitalist
Capitalization Table
capital gain
Initial Public Offering
2. Cannot get other outside investors-No Shop
recapitalization
No Shop/Confidentiality
Qualified IPO
Pre-Money Valuation
3. 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
Liquidation Preference
Private Equity
management buy-out (MBO)
Internal Rate of Return
4. 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
private equity
equity financing
Limited Partnership Agreement
Restricted Stock
5. 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
Outstanding Stock
term sheet
syndication
6. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
syndication
IPO (Initial Public Offering)
equity financing
7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
follow-on
Anti-Dilution Protections
capital under management
8. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Term Sheet
Adjusted Book Value
exit route
Common Equity
9. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Burn Rate
Venture Capitalist
Anti-Dilution Protections
executive summary
10. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally
limited partnerships
Common Equity
management buy-in (MBI)
Liquidation Preference
11. 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
Due Diligence
Limited Partner
seed capital
Preferred Stock
12. 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
Capital Call 'Drawdown'
exit
Venture Capital Financing
13. The method by which an investor will realize an investment.
Series A Preferred Stock
Liquidation Preference
exit route
Outstanding Stock
14. The residual ownership in a company like a corporation or LLC 51%=control
Private Equity
Equity
Seed Money
IRR
15. 'I will buy stock at price we negotiate'
management buy-in (MBI)
Qualified IPO
Stock Price Agreement
Conversion Rights
16. 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
secondary purchase
Series A Preferred Stock
Equity
Qualified IPO
17. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
bridge loans
private investment in public equities (PIPE)
term sheet
18. 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.
Bootstrapping
Dividends
IPO(initial public offerings)
C Corporation
19. The party that manages a limited partnership and is liable for the debts of the company
management buy-in (MBI)
Conversion Rights
corporate venturing
General Partner (GP)
20. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Preferred Stock
Deal Structure
Liquidation
Liquidation Preference
21. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Liquidation
Business Summary
closing
Market Capitalization
22. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Pre-money valuation
Liquidation Preference
capital gain
Corporation (Limited liability and taxation)
23. 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
Post-Money Valuation
exit route
benchmarks
seed capital
24. 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
going private
institutional investors
equity offerings
Capital Call 'Drawdown'
25. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Capital Commitment
Deal Structure
raising capital
26. 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
Venture Capitalist
Senior Stock
Limited Partner
C Corporation
27. 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.
portfolio compaay
Limited Partnership Agreement
liquidation
Common Stock
28. Investments by a private equity fund in a publicly traded company - usually at a discount.
Term Sheet
series a preferred stock
Book Value
private investment in public equities (PIPE)
29. 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.
Qualified IPO
Liquidation Preference
Bridge Financing
IRR
30. 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 Stock
Lead Investor
term sheet
executive summary
31. 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
Preferred Stock
benchmarks
corporate venturing
exit route
32. 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
Post-money
Cash-out election
NDA (Non-disclosure agreement)
fund of funds
33. 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.
lead investor
lock-up period
institutional investors
Book Value
34. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Bootstrapping
Capital
Bridge Financing
PPM
35. 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
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36. The amount of this available to a management team for venture investments.
private investment in public equities (PIPE)
Common Stock
Preferred Stock
capital under management
37. 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
lead investor
Due Diligence
Elevator Pitch
Pre-Money Valuation
38. A study of the background and financial reliability of the company - management team and industry.
capital under management
Common Stock
Due Diligence
Term Sheet
39. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
syndication
management buy-in (MBI)
exit
C Corporation
40. Term sheet for equity offering
Deal Structure
Conversion Rights
Capital Call 'Drawdown'
Term Sheet
41. The maximum amount of cash that a partner is required to contribute under the terms
executive summary
Capital Commitment
Bridge Financing
Book Value
42. 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.
Preferred Stock
Outstanding Stock
Common Stock
Angel Financing
43. 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.
Qualified IPO
follow-on
limited partnerships
Liquidity Event
44. The value at which an asset is carried on a balance sheet (the cost of the item)
Equity
Book Value
equity offerings
Preferred Stock
45. Assets are subject to double taxation - Unlimited number of investors
lock-up period
exit
Internal Rate of Return
C Corporation
46. 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
small business investment companies (SBIC)
mezzanine financing
series a preferred stock
Book Value
47. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.
lead investor
Warrants
Capital
Pre-Money Valuation
48. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Deal Structure
Stock Price Agreement
Warrants
closing
49. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
going private
Pre-Money Valuation
Conversion Rights
return on investment (ROI)
50. 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.
Venture Capital Financing
Deal Structure
term sheet
Liquidation