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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. 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
Corporation (Limited liability and taxation)
Senior Stock
return on investment (ROI)
Elevator Pitch
2. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Liquidation Preference
Business Summary
Membership Interest
Warrants
3. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
NDA (Non-disclosure agreement)
Qualified IPO
Due Diligence
equity offerings
4. 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
Liquidation Preference
mezzanine financing
Common Stock
Conversion Rights
5. The maximum amount of cash that a partner is required to contribute under the terms
executive summary
Common Stock
return on investment (ROI)
Capital Commitment
6. 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.
minority enterprise small business investment companies (MESBICS)
Common Stock
follow-on
management buy-in (MBI)
7. 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
Restricted Shares
Elevator Pitch
Common Stock
Market Capitalization
8. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t
No Shop/Confidentiality
small business investment companies (SBIC)
Private Equity
Capital Commitment
9. 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.
Restricted Shares
Restricted Stock
Bridge Financing
General Partner (GP)
10. This refers to a synopsis of the key points of a business plan.
buyout
limited partnerships
executive summary
IPO(initial public offerings)
11. 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
Business Plan
Term Sheet
Stock Price Agreement
debt financing
12. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Restricted Shares
Seed Money
management buy-in (MBI)
term sheet
13. Compound internal rate of return.
Capital Commitment
management buy-out (MBO)
mezzanine financing
IRR
14. 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.
syndication
Seed Money
Preferred Stock
General Partner (GP)
15. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
angel investors
Angel Financing
closing
Subordinated Debt
16. 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
mezzanine financing
Capitalization Table
Restricted Stock
Corporation (Limited liability and taxation)
17. 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.
follow-on
Private Equity
Outstanding Stock
lock-up period
18. 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
Lead Investor
Private Equity
liquidation
term sheet
19. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
return on investment (ROI)
Pre-Money Valuation
Pre-Money Valuation
20. 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 -
Common Stock
Business Plan
limited partnerships
Bootstrapping
21. 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
exit route
Limited Partner
NDA (Non-disclosure agreement)
Preferred Stock
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.
Subordinated Debt
lead investor
Bridge Financing
Preferred Stock
23. A security with limits on its transferability. Usually issued in connection with a private placement
raising capital
Lead Investor
Qualified IPO
Restricted Stock
24. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
mezzanine financing
angel investors
equity offerings
Anti-Dilution Protections
25. Letter of intent summarizing the key legal and financial terms
Restricted Shares
Term Sheet
portfolio compaay
IPO (Initial Public Offering)
26. 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
Capital Call 'Drawdown'
portfolio compaay
going private
S Corporation
27. 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.
portfolio compaay
turnaround
Stock Price Agreement
Dividends
28. An investment vehicle designed to invest in a diversified group of investment funds.
leverage buy-out(LBO)
fund of funds
return on investment (ROI)
private investment in public equities (PIPE)
29. 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
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30. 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
IRR
debt financing
Liquidation
Anti-Dilution Protections
31. 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
Elevator Pitch
small business investment companies (SBIC)
Adjusted Book Value
Preferred Stock
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.
Common Equity
lock-up period
venture capital
Preferred Stock
33. Investments by a private equity fund in a publicly traded company - usually at a discount.
Subordinated Debt
acquisition
private investment in public equities (PIPE)
small business investment companies (SBIC)
34. 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
debt financing
Bridge Financing
seed capital
Term Sheet
35. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Corporation (Limited liability and taxation)
IPO (Initial Public Offering)
buyout
Adjusted Book Value
36. The method by which an investor will realize an investment.
Internal Rate of Return
capital gain
Warrants
exit route
37. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
Venture Capital Financing
Book Value
buyout
Preferred Stock
38. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
syndication
Common Equity
Confidentiality
Outstanding Stock
39. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
fund of funds
private equity
Membership Interest
40. 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
benchmarks
syndication
Capital Commitment
Due Diligence
41. Term sheet for equity offering
Lead Investor
series a preferred stock
Term Sheet
mezzanine financing
42. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Series A Preferred Stock
Market Capitalization
C Corporation
43. Don't talk to the market about the company
capital under management
benchmarks
Confidentiality
Term Sheet
44. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
mezzanine financing
Angel Financing
secondary purchase
Anti-Dilution Protections
45. 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
Qualified IPO
C Corporation
Pre-Money Valuation
series a preferred stock
46. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
turnaround
capital gain
closing
Common Stock
47. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Post-Money Valuation
leverage buy-out(LBO)
Elevator Pitch
48. 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
General Partner (GP)
Seed Money
Market Capitalization
Common Stock
49. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Capital Commitment
Due Diligence
Liquidity Event
benchmarks
50. 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.
mezzanine financing
angel investors
secondary purchase
Internal Rate of Return