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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. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.
Post-Money Valuation
Bootstrapping
Private Equity
Pre-money valuation
2. 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.).
secondary purchase
institutional investors
Bridge Financing
Burn Rate
3. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
term sheet
Common Equity
recapitalization
IPO (Initial Public Offering)
4. 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
IPO (Initial Public Offering)
mezzanine financing
capital under management
Dividends
5. 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
No Shop/Confidentiality
Restricted Shares
Liquidation Preference
minority enterprise small business investment companies (MESBICS)
6. 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.
Restricted Shares
Outstanding Stock
Anti-Dilution Protections
PPM
7. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Closing
Conversion Rights
Confidentiality
PPM
8. 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
Anti-Dilution Protections
Pre-Money Valuation
IRR
Capitalization Table
9. 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.
minority enterprise small business investment companies (MESBICS)
Venture Capital Financing
term sheet
Liquidation
10. 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
Initial Public Offering
Stock Price Agreement
going private
Pre-money valuation
11. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
bridge loans
Lead Investor
Business Plan
12. 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
Restricted Shares
fund of funds
Venture Capitalist
due diligence
13. Term sheet for equity offering
Voting Rights
Term Sheet
Pre-Money Valuation
Membership Interest
14. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
venture capital
Stock Price Agreement
closing
C Corporation
15. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Common Stock
follow-on
going private
16. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
minority enterprise small business investment companies (MESBICS)
lock-up period
series a preferred stock
17. 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.
exit
Deal Structure
Cash-out election
benchmarks
18. Cannot get other outside investors-No Shop
secondary public offering
institutional investors
private equity
No Shop/Confidentiality
19. 'I will buy stock at price we negotiate'
Seed Money
due diligence
seed capital
Stock Price Agreement
20. The way you buy stock
PPM
Private Equity
private investment in public equities (PIPE)
private equity
21. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Liquidation Preference
Liquidation
IPO (Initial Public Offering)
equity offerings
22. This refers to a synopsis of the key points of a business plan.
executive summary
Capitalization Table
seed capital
Bootstrapping
23. The value at which an asset is carried on a balance sheet (the cost of the item)
Internal Rate of Return
Book Value
Corporation (Limited liability and taxation)
Membership Interest
24. 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
lock-up period
secondary purchase
Corporation (Limited liability and taxation)
Private Equity
25. The residual ownership in a company like a corporation or LLC 51%=control
Equity
PPM
follow-on
Business Plan
26. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Due Diligence
Restricted Shares
Restricted Stock
Anti-Dilution Protections
27. 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
seed capital
Subordinated Debt
Business Plan
Deal Structure
28. 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
Elevator Pitch
Outstanding Stock
Venture Capitalist
small business investment companies (SBIC)
29. How you get to vote
Voting Rights
exit route
IPO(initial public offerings)
Private Equity
30. The amount of this available to a management team for venture investments.
capital under management
mezzanine financing
Preferred Stock
lock-up period
31. 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
Post-Money Valuation
Liquidity Event
Elevator Pitch
32. Don't talk to the market about the company
recapitalization
Confidentiality
follow-on
acquisition
33. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
management buy-out (MBO)
Adjusted Book Value
angel investors
leverage buy-out(LBO)
34. A study of the background and financial reliability of the company - management team and industry.
Restricted Shares
Capitalization Table
Due Diligence
Common Stock
35. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Confidentiality
fund of funds
recapitalization
36. The company or entity into which a fund invests directly.
Qualified IPO
turnaround
portfolio compaay
Venture Capitalist
37. 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
IPO (Initial Public Offering)
Senior Stock
Common Stock
mezzanine financing
38. 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.
lead investor
Market Capitalization
Voting Rights
Equity
39. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Limited Partner
series a preferred stock
minority enterprise small business investment companies (MESBICS)
management buy-in (MBI)
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.
Liquidation Preference
leverage buy-out(LBO)
liquidation
Conversion Rights
41. The total value of the company immediately prior to the latest round of financing
Corporation (Limited liability and taxation)
Pre-money valuation
Closing
Venture Capitalist
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.
term sheet
Internal Rate of Return
Preferred Stock
Deal Structure
43. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
Common Stock
raising capital
Pre-Money Valuation
44. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Limited Partnership Agreement
secondary public offering
Cash-out election
45. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Preferred Stock
management buy-in (MBI)
Common Stock
Subordinated Debt
46. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Market Capitalization
corporate venturing
secondary purchase
seed capital
47. Compound internal rate of return.
angel investors
syndication
IRR
lead investor
48. 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.
limited partnerships
term sheet
portfolio compaay
Bridge Financing
49. 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
Series A Preferred Stock
Stock Price Agreement
Common Equity
Outstanding Stock
50. 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
Corporation (Limited liability and taxation)
venture capital
seed capital
Series A Preferred Stock