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






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






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






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






5. 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






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






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






8. 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






9. 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.).






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






11. 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.






12. Don't talk to the market about the company






13. 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.






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






15. Cannot get other outside investors-No Shop






16. How you get to vote






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






18. How you get out






19. 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






20. 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






21. 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.






22. 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






23. 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






24. 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






25. 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






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






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






28. 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






29. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






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






31. 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.






32. 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) ...






33. The company or entity into which a fund invests directly.






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






35. 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.






36. The way you buy stock






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






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






39. 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.






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






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






42. Compound internal rate of return.






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






44. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






46. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






47. 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






48. The party that manages a limited partnership and is liable for the debts of the company






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






50. 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