Test your basic knowledge |

Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. The amount of this available to a management team for venture investments.






2. 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) ...






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






4. The way you buy stock






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






6. 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






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






8. 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.






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






10. The internal rate of return on an investment.






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






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






13. 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.






14. 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.






15. 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






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






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






18. 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.






19. 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






20. 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






21. 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






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






23. 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






24. How you get out






25. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






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






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






29. 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.






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






31. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






32. The company or entity into which a fund invests directly.






33. No double tax - Limited number of investors






34. 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






35. 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.






36. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






37. An investment vehicle designed to invest in a diversified group of investment funds.






38. 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






39. 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.






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






41. 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.






42. 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






43. 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






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






45. 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






46. An IPO that has met certain






47. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






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






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






50. Issue of shares of a company to the public by the company (directly) for the first time.