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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. Pre-money valuation plus the amount invested in the latest round
Post-money
Initial Public Offering
raising capital
Post-Money Valuation
2. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Bridge Financing
Term Sheet
Liquidation Preference
secondary purchase
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
Preferred Stock
Private Equity
Due Diligence
bridge loans
4. 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
Corporation (Limited liability and taxation)
series a preferred stock
raising capital
Limited Partner
5. An IPO that has met certain
Qualified IPO
capital gain
Membership Interest
Seed Money
6. The value at which an asset is carried on a balance sheet (the cost of the item)
Initial Public Offering
Market Capitalization
Book Value
series a preferred stock
7. 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.
Venture Capitalist
Liquidity Event
mezzanine financing
leverage buy-out(LBO)
8. The internal rate of return on an investment.
Adjusted Book Value
IPO(initial public offerings)
Liquidity Event
return on investment (ROI)
9. A security with limits on its transferability. Usually issued in connection with a private placement
Lead Investor
follow-on
going private
Restricted Stock
10. The company or entity into which a fund invests directly.
portfolio compaay
Stock Price Agreement
Deal Structure
turnaround
11. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Capital Call 'Drawdown'
NDA (Non-disclosure agreement)
equity offerings
Term Sheet
12. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
seed capital
closing
fund of funds
Deal Structure
13. Date the LP's subscription is effective and they become partner
Closing
turnaround
Preferred Stock
NDA (Non-disclosure agreement)
14. 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
equity offerings
going private
recapitalization
Voting Rights
15. 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
Pre-Money Valuation
Liquidation Preference
return on investment (ROI)
16. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Post-Money Valuation
management buy-in (MBI)
Seed Money
executive summary
17. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Initial Public Offering
Venture Capital Financing
bridge loans
18. 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
minority enterprise small business investment companies (MESBICS)
Voting Rights
Corporation (Limited liability and taxation)
benchmarks
19. The equity ownership in a corporation. Also has basic voting rights
Common Stock
small business investment companies (SBIC)
C Corporation
IPO(initial public offerings)
20. 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
Capital
Series A Preferred Stock
Stock Price Agreement
Venture Capitalist
21. The method by which an investor will realize an investment.
exit route
Cash-out election
Initial Public Offering
capital under management
22. 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
Market Capitalization
Term Sheet
seed capital
going private
23. 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
Angel Financing
Restricted Stock
Preferred Stock
Limited Partnership Agreement
24. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
turnaround
exit
Common Equity
Confidentiality
25. 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.
Anti-Dilution Protections
Business Plan
Liquidation
turnaround
26. 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) ...
IPO (Initial Public Offering)
private investment in public equities (PIPE)
Restricted Shares
Initial Public Offering
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
Outstanding Stock
Pre-money valuation
Anti-Dilution Protections
28. An investment vehicle designed to invest in a diversified group of investment funds.
Preferred Stock
PPM
follow-on
fund of funds
29. Assets are subject to double taxation - Unlimited number of investors
Confidentiality
Liquidation
C Corporation
Business Plan
30. 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
Business Summary
Bootstrapping
Pre-Money Valuation
due diligence
31. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
Membership Interest
S Corporation
Private Equity
32. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Series A Preferred Stock
Equity
executive summary
Adjusted Book Value
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.
buyout
Capital Call 'Drawdown'
lock-up period
Business Summary
34. 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.
Post-money
Common Stock
buyout
Deal Structure
35. The total value of the company immediately prior to the latest round of financing
Closing
Confidentiality
Pre-money valuation
Venture Capitalist
36. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
limited partnerships
bridge loans
Membership Interest
Restricted Stock
37. 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
Confidentiality
executive summary
Restricted Shares
bridge loans
38. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
capital under management
Liquidation
benchmarks
S Corporation
39. The way you buy stock
executive summary
private investment in public equities (PIPE)
Liquidation Preference
PPM
40. 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
Closing
term sheet
return on investment (ROI)
Liquidation Preference
41. 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
turnaround
liquidation
Business Plan
Capitalization Table
42. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
fund of funds
liquidation
Pre-Money Valuation
43. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Common Stock
due diligence
benchmarks
Dividends
44. No double tax - Limited number of investors
Liquidation
corporate venturing
Bridge Financing
S Corporation
45. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Book Value
series a preferred stock
Warrants
Capitalization Table
46. 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.
portfolio compaay
follow-on
institutional investors
Preferred Stock
47. How you get out
Liquidation Preference
S Corporation
Capital Call 'Drawdown'
minority enterprise small business investment companies (MESBICS)
48. 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
Liquidation Preference
Elevator Pitch
No Shop/Confidentiality
Liquidation
49. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Stock Price Agreement
series a preferred stock
Initial Public Offering
Business Summary
50. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap
lead investor
Venture Capital Financing
Seed Money
Post-money