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. How you get out






2. 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






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






4. 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.






5. The maximum amount of cash that a partner is required to contribute under the terms






6. How much the company is worth before an investment






7. Letter of intent summarizing the key legal and financial terms






8. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






9. 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






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






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






12. 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






13. 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






14. 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






15. 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.






16. Investments by a private equity fund in a publicly traded company - usually at a discount.






17. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






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






19. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






20. 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) ...






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






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






23. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






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






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






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






27. 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






28. Cannot get other outside investors-No Shop






29. 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






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






31. 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






32. Term sheet for equity offering






33. 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.






34. 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.






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






36. 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






37. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






38. 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.






39. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






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






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






42. 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.






43. 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 -






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






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






46. 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






47. The practice of a large company taking a minority equity position in a smaller company in a related field.






48. 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






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






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