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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 maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
series a preferred stock
Bootstrapping
Dividends
2. 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.
follow-on
acquisition
Preferred Stock
buyout
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
mezzanine financing
secondary purchase
Private Equity
institutional investors
4. 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
Limited Partner
raising capital
benchmarks
follow-on
5. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Initial Public Offering
Private Equity
Due Diligence
6. 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
7. 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
Pre-Money Valuation
Stock Price Agreement
Dividends
Bridge Financing
8. 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
venture capital
recapitalization
Elevator Pitch
corporate venturing
9. 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
bridge loans
return on investment (ROI)
Business Plan
Liquidity Event
10. The rate at which a company expends net cash over a certain period - usually a month.
buyout
benchmarks
equity offerings
Burn Rate
11. The practice of a large company taking a minority equity position in a smaller company in a related field.
Bridge Financing
mezzanine financing
corporate venturing
Pre-Money Valuation
12. A business owned by stockholders who share in its profits but are not personally responsible for its debts
management buy-out (MBO)
Corporation (Limited liability and taxation)
Adjusted Book Value
fund of funds
13. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Post-money
angel investors
buyout
Capital
14. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.
series a preferred stock
Elevator Pitch
Pre-Money Valuation
Preferred Stock
15. 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.
follow-on
turnaround
secondary public offering
benchmarks
16. 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.
minority enterprise small business investment companies (MESBICS)
return on investment (ROI)
Deal Structure
Confidentiality
17. The company or entity into which a fund invests directly.
Common Equity
Common Stock
portfolio compaay
Restricted Shares
18. 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.
lock-up period
Warrants
bridge loans
Business Summary
19. This refers to a synopsis of the key points of a business plan.
PPM
private equity
Venture Capital Financing
executive summary
20. 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
Internal Rate of Return
Common Equity
C Corporation
seed capital
21. The total value of the company immediately prior to the latest round of financing
Outstanding Stock
Pre-money valuation
limited partnerships
angel investors
22. 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
Pre-Money Valuation
exit
recapitalization
Cash-out election
23. 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
Preferred Stock
secondary purchase
Restricted Stock
Venture Capitalist
24. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
Outstanding Stock
Capital Call 'Drawdown'
portfolio compaay
25. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
syndication
Senior Stock
equity financing
Series A Preferred Stock
26. 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
Subordinated Debt
syndication
Common Stock
27. 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.
acquisition
Capital
Common Stock
Internal Rate of Return
28. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
Capitalization Table
Cash-out election
Market Capitalization
secondary public offering
29. The rate of return or profit that an investment is expected to earn.
angel investors
recapitalization
Internal Rate of Return
portfolio compaay
30. 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
going private
liquidation
NDA (Non-disclosure agreement)
Market Capitalization
31. An IPO that has met certain
capital gain
Internal Rate of Return
Qualified IPO
Liquidation Preference
32. No double tax - Limited number of investors
recapitalization
exit
Limited Partnership Agreement
S Corporation
33. The internal rate of return on an investment.
Pre-Money Valuation
Liquidation Preference
return on investment (ROI)
IPO(initial public offerings)
34. Pre-money valuation plus the amount invested in the latest round
Post-money
exit
IRR
going private
35. 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.
Cash-out election
Qualified IPO
equity offerings
management buy-out (MBO)
36. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
liquidation
NDA (Non-disclosure agreement)
Conversion Rights
Liquidation Preference
37. How much the company is worth before an investment
Deal Structure
Pre-Money Valuation
Confidentiality
Closing
38. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -
IPO(initial public offerings)
limited partnerships
lead investor
Market Capitalization
39. 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
Deal Structure
Preferred Stock
Cash-out election
Pre-Money Valuation
40. 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.).
secondary public offering
limited partnerships
institutional investors
venture capital
41. 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
small business investment companies (SBIC)
private investment in public equities (PIPE)
Pre-Money Valuation
private equity
42. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Pre-Money Valuation
Liquidity Event
exit route
43. Cannot get other outside investors-No Shop
Term Sheet
seed capital
No Shop/Confidentiality
Anti-Dilution Protections
44. The value at which an asset is carried on a balance sheet (the cost of the item)
follow-on
Due Diligence
Qualified IPO
Book Value
45. This refers to obtaining capital from investors or venture capital sources.
Qualified IPO
raising capital
Post-money
Subordinated Debt
46. The way you buy stock
PPM
S Corporation
series a preferred stock
Limited Partner
47. Selling an interest in your business to an outside party to raise money.
syndication
Pre-Money Valuation
management buy-out (MBO)
equity financing
48. Date the LP's subscription is effective and they become partner
Closing
Bootstrapping
Liquidity Event
recapitalization
49. Compound internal rate of return.
Bridge Financing
Capital Commitment
Burn Rate
IRR
50. 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
Private Equity
Anti-Dilution Protections
going private
Seed Money