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. An IPO that has met certain






2. 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.






3. The residual ownership in a company like a corporation or LLC 51%=control






4. The method by which an investor will realize an investment.






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






6. 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.






7. 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) ...






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






9. Pre-money valuation plus the amount invested in the latest round






10. How you get out






11. 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.






12. 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


13. 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.






14. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






15. Compound internal rate of return.






16. 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






17. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






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






19. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






20. 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.






21. 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






22. 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.






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






24. How you get to vote






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






26. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






27. 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






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.






29. No double tax - Limited number of investors






30. 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 -






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






32. 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.






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






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






35. 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






36. 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.






37. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






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






39. 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.






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






41. 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






42. 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






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






44. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






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






46. 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






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






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






49. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.






50. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project