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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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






2. 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.






3. The method by which an investor will realize an investment.






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






5. No double tax - Limited number of investors






6. 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






7. 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.






8. 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






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






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






11. Selling an interest in your business to an outside party to raise money.






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






13. Compound internal rate of return.






14. A study of the background and financial reliability of the company - management team and industry.






15. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






16. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






17. 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






18. 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






19. The internal rate of return on an investment.






20. Assets are subject to double taxation - Unlimited number of investors






21. 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.






22. The amount of this available to a management team for venture investments.






23. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






24. How you get out






25. 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






26. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






27. 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






28. Cannot get other outside investors-No Shop






29. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






30. A security with limits on its transferability. Usually issued in connection with a private placement






31. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






32. 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






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






34. 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.






35. The residual ownership in a company like a corporation or LLC 51%=control






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






37. The way you buy stock






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






39. 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






40. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






41. 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






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






43. 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






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






45. The party that manages a limited partnership and is liable for the debts of the company






46. An IPO that has met certain






47. 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






48. 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.






49. 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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50. 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.