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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. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
management buy-out (MBO)
Corporation (Limited liability and taxation)
Pre-Money Valuation
2. How you get to vote
Closing
Corporation (Limited liability and taxation)
capital gain
Voting Rights
3. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
recapitalization
going private
Deal Structure
4. The company or entity into which a fund invests directly.
portfolio compaay
Preferred Stock
exit
Preferred Stock
5. The rate of return or profit that an investment is expected to earn.
Common Stock
capital gain
Stock Price Agreement
Internal Rate of Return
6. The residual ownership in a company like a corporation or LLC 51%=control
private equity
Series A Preferred Stock
Equity
venture capital
7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
corporate venturing
term sheet
Corporation (Limited liability and taxation)
equity offerings
8. 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
capital under management
Post-Money Valuation
debt financing
term sheet
9. 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.
Qualified IPO
Closing
bridge loans
minority enterprise small business investment companies (MESBICS)
10. 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
Liquidation Preference
angel investors
General Partner (GP)
11. 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.
Post-money
IPO(initial public offerings)
Confidentiality
recapitalization
12. The total value of the company immediately prior to the latest round of financing
Preferred Stock
Pre-money valuation
seed capital
Elevator Pitch
13. The internal rate of return on an investment.
Liquidation
return on investment (ROI)
C Corporation
Market Capitalization
14. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Bootstrapping
Pre-Money Valuation
Pre-Money Valuation
Capital
15. 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.
Seed Money
Burn Rate
venture capital
follow-on
16. 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) ...
Initial Public Offering
Bridge Financing
Term Sheet
lead investor
17. 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
Post-Money Valuation
Pre-money valuation
Angel Financing
going private
18. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
corporate venturing
secondary public offering
C Corporation
19. 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
Preferred Stock
Anti-Dilution Protections
secondary public offering
debt financing
20. 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
lock-up period
leverage buy-out(LBO)
Venture Capitalist
Series A Preferred Stock
21. 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
leverage buy-out(LBO)
Dividends
Seed Money
bridge loans
22. 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
Limited Partner
bridge loans
Series A Preferred Stock
exit
23. 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
24. 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.
Bridge Financing
Outstanding Stock
PPM
Cash-out election
25. 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.
Burn Rate
syndication
angel investors
Preferred Stock
26. 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
Elevator Pitch
Business Plan
lock-up period
exit route
27. 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.).
Initial Public Offering
institutional investors
Voting Rights
Membership Interest
28. 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
C Corporation
Burn Rate
Market Capitalization
Equity
29. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Preferred Stock
Equity
venture capital
exit
30. 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
Internal Rate of Return
corporate venturing
benchmarks
Lead Investor
31. Compound internal rate of return.
IRR
seed capital
Series A Preferred Stock
series a preferred stock
32. 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.
Initial Public Offering
IPO(initial public offerings)
Deal Structure
Capital
33. The equity ownership in a corporation. Also has basic voting rights
Venture Capital Financing
Corporation (Limited liability and taxation)
Common Stock
debt financing
34. How much the company is worth before an investment
Term Sheet
Capital Commitment
Pre-Money Valuation
Liquidation Preference
35. The party that manages a limited partnership and is liable for the debts of the company
Liquidation Preference
management buy-in (MBI)
General Partner (GP)
Pre-Money Valuation
36. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Elevator Pitch
management buy-out (MBO)
Subordinated Debt
return on investment (ROI)
37. Don't talk to the market about the company
Confidentiality
secondary purchase
due diligence
Capital
38. 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.
Dividends
PPM
Stock Price Agreement
secondary public offering
39. Letter of intent summarizing the key legal and financial terms
buyout
series a preferred stock
Term Sheet
General Partner (GP)
40. The method by which an investor will realize an investment.
exit route
Internal Rate of Return
Dividends
fund of funds
41. The way you buy stock
NDA (Non-disclosure agreement)
Seed Money
Liquidity Event
PPM
42. 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.
Bootstrapping
General Partner (GP)
Pre-Money Valuation
Warrants
43. Pre-money valuation plus the amount invested in the latest round
Corporation (Limited liability and taxation)
Post-money
Common Stock
Capitalization Table
44. Cannot get other outside investors-No Shop
IRR
No Shop/Confidentiality
Subordinated Debt
Venture Capital Financing
45. 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 -
Capital Commitment
limited partnerships
Bridge Financing
exit route
46. This refers to obtaining capital from investors or venture capital sources.
Book Value
fund of funds
raising capital
closing
47. 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
IPO (Initial Public Offering)
Liquidation Preference
Capital
48. 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
debt financing
Private Equity
Elevator Pitch
secondary purchase
49. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
recapitalization
Common Equity
closing
small business investment companies (SBIC)
50. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
recapitalization
portfolio compaay
Liquidity Event