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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 equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Cash-out election
term sheet
Pre-Money Valuation
Capital
2. The value at which an asset is carried on a balance sheet (the cost of the item)
Term Sheet
Burn Rate
Book Value
IPO (Initial Public Offering)
3. 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
small business investment companies (SBIC)
Pre-money valuation
fund of funds
4. How you get to vote
NDA (Non-disclosure agreement)
Business Plan
IPO(initial public offerings)
Voting Rights
5. 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
Membership Interest
minority enterprise small business investment companies (MESBICS)
Outstanding Stock
private equity
6. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
exit route
acquisition
Series A Preferred Stock
Conversion Rights
7. An investment vehicle designed to invest in a diversified group of investment funds.
Term Sheet
Bridge Financing
Business Plan
fund of funds
8. The method by which an investor will realize an investment.
Series A Preferred Stock
Bootstrapping
exit route
Deal Structure
9. Pre-money valuation plus the amount invested in the latest round
Lead Investor
Outstanding Stock
Post-money
buyout
10. 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.
General Partner (GP)
benchmarks
NDA (Non-disclosure agreement)
mezzanine financing
11. 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
Common Stock
angel investors
Capitalization Table
Limited Partner
12. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Common Stock
management buy-in (MBI)
exit
fund of funds
13. The practice of a large company taking a minority equity position in a smaller company in a related field.
secondary public offering
corporate venturing
private investment in public equities (PIPE)
Book Value
14. Term sheet for equity offering
Limited Partner
Term Sheet
portfolio compaay
turnaround
15. 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
secondary purchase
Liquidation Preference
Stock Price Agreement
Dividends
16. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Common Equity
Bridge Financing
Equity
17. 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
18. 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.
Market Capitalization
Subordinated Debt
Common Stock
Preferred Stock
19. 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
private equity
benchmarks
bridge loans
20. No double tax - Limited number of investors
S Corporation
Internal Rate of Return
Senior Stock
Adjusted Book Value
21. The internal rate of return on an investment.
return on investment (ROI)
Membership Interest
bridge loans
exit route
22. How much the company is worth before an investment
series a preferred stock
portfolio compaay
minority enterprise small business investment companies (MESBICS)
Pre-Money Valuation
23. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Burn Rate
return on investment (ROI)
NDA (Non-disclosure agreement)
Series A Preferred Stock
24. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
Liquidation Preference
executive summary
lead investor
25. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo
due diligence
capital gain
debt financing
PPM
26. 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
turnaround
Business Summary
Preferred Stock
Lead Investor
27. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
C Corporation
Due Diligence
Angel Financing
Anti-Dilution Protections
28. 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.
Voting Rights
syndication
Stock Price Agreement
private equity
29. 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) ...
Capitalization Table
Initial Public Offering
C Corporation
Outstanding Stock
30. 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.
fund of funds
Qualified IPO
institutional investors
management buy-out (MBO)
31. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
lead investor
Adjusted Book Value
leverage buy-out(LBO)
Membership Interest
32. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l
IPO(initial public offerings)
bridge loans
turnaround
Initial Public Offering
33. 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.
IPO (Initial Public Offering)
Elevator Pitch
equity offerings
Deal Structure
34. 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
Bootstrapping
Common Stock
Restricted Shares
due diligence
35. 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.
Market Capitalization
lead investor
private equity
series a preferred stock
36. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
fund of funds
management buy-in (MBI)
Liquidation
Business Summary
37. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
Voting Rights
Liquidation Preference
follow-on
38. This refers to a synopsis of the key points of a business plan.
executive summary
seed capital
Post-money
fund of funds
39. This refers to obtaining capital from investors or venture capital sources.
raising capital
Anti-Dilution Protections
management buy-in (MBI)
Private Equity
40. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Closing
Common Stock
leverage buy-out(LBO)
capital under management
41. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
venture capital
private investment in public equities (PIPE)
Pre-money valuation
42. 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
Post-money
Angel Financing
management buy-out (MBO)
Market Capitalization
43. 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.
Preferred Stock
lock-up period
Pre-money valuation
Business Summary
44. 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
closing
venture capital
Common Equity
Restricted Stock
45. Cannot get other outside investors-No Shop
capital gain
institutional investors
No Shop/Confidentiality
IPO (Initial Public Offering)
46. Don't talk to the market about the company
raising capital
Confidentiality
debt financing
IPO (Initial Public Offering)
47. 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.).
mezzanine financing
Liquidity Event
institutional investors
management buy-out (MBO)
48. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
bridge loans
syndication
series a preferred stock
closing
49. Date the LP's subscription is effective and they become partner
Lead Investor
NDA (Non-disclosure agreement)
Membership Interest
Closing
50. Compound internal rate of return.
IRR
management buy-out (MBO)
Closing
PPM