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






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






3. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.






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






5. 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






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






7. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






8. This refers to obtaining capital from investors or venture capital sources.






9. The internal rate of return on an investment.






10. 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.






11. 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






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






13. 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.).






14. 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






15. 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.






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






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






18. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






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






20. 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






21. 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






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






23. 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






24. An IPO that has met certain






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






26. The rate of return or profit that an investment is expected to earn.






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






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






29. 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






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






31. 'I will buy stock at price we negotiate'






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






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






34. 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






35. 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






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






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






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






39. 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.






40. 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






41. 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.






42. 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






43. 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






44. 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






45. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






47. 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






48. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






49. 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.






50. The way you buy stock