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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. An IPO that has met certain
closing
Initial Public Offering
Qualified IPO
exit
2. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Adjusted Book Value
Common Equity
C Corporation
3. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Market Capitalization
acquisition
Venture Capital Financing
4. Compound internal rate of return.
IRR
private equity
management buy-in (MBI)
Membership Interest
5. 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
Limited Partnership Agreement
Seed Money
Lead Investor
acquisition
6. 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.
Initial Public Offering
liquidation
return on investment (ROI)
Capital Call 'Drawdown'
7. The maximum amount of cash that a partner is required to contribute under the terms
Burn Rate
corporate venturing
Outstanding Stock
Capital Commitment
8. 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
Common Stock
management buy-out (MBO)
liquidation
9. 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.
exit
Adjusted Book Value
follow-on
Pre-money valuation
10. 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
Term Sheet
series a preferred stock
Lead Investor
Pre-Money Valuation
11. The company or entity into which a fund invests directly.
Post-money
Liquidation Preference
Pre-Money Valuation
portfolio compaay
12. 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.
Preferred Stock
General Partner (GP)
lock-up period
private investment in public equities (PIPE)
13. 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)
seed capital
capital under management
exit route
14. 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
Restricted Shares
Preferred Stock
fund of funds
Venture Capital Financing
15. 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
General Partner (GP)
S Corporation
Private Equity
Adjusted Book Value
16. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Lead Investor
secondary purchase
Anti-Dilution Protections
Capital Commitment
17. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
mezzanine financing
Liquidation Preference
Common Equity
secondary purchase
18. A security with limits on its transferability. Usually issued in connection with a private placement
Qualified IPO
series a preferred stock
Restricted Stock
Common Stock
19. 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
Limited Partnership Agreement
Common Equity
small business investment companies (SBIC)
management buy-out (MBO)
20. 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
return on investment (ROI)
Preferred Stock
follow-on
No Shop/Confidentiality
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.
Venture Capital Financing
IPO(initial public offerings)
minority enterprise small business investment companies (MESBICS)
Term Sheet
22. 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
Adjusted Book Value
Capital Commitment
venture capital
Capital
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
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24. 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
leverage buy-out(LBO)
buyout
executive summary
25. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.
management buy-out (MBO)
IPO(initial public offerings)
follow-on
Liquidation Preference
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
fund of funds
Stock Price Agreement
Burn Rate
Business Plan
27. The equity ownership in a corporation. Also has basic voting rights
Common Stock
private equity
Pre-Money Valuation
Anti-Dilution Protections
28. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Term Sheet
Conversion Rights
Subordinated Debt
term sheet
29. The way you buy stock
PPM
Term Sheet
Stock Price Agreement
limited partnerships
30. This refers to obtaining capital from investors or venture capital sources.
raising capital
Elevator Pitch
Voting Rights
Pre-money valuation
31. 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
Anti-Dilution Protections
Conversion Rights
Post-money
32. 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
capital gain
Liquidation
Seed Money
Liquidation Preference
33. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Preferred Stock
Preferred Stock
Adjusted Book Value
bridge loans
34. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
venture capital
Due Diligence
equity offerings
limited partnerships
35. 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
Stock Price Agreement
equity financing
Limited Partner
angel investors
36. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
return on investment (ROI)
Pre-Money Valuation
due diligence
benchmarks
37. Don't talk to the market about the company
Confidentiality
institutional investors
Burn Rate
minority enterprise small business investment companies (MESBICS)
38. A business owned by stockholders who share in its profits but are not personally responsible for its debts
secondary purchase
Corporation (Limited liability and taxation)
Private Equity
Term Sheet
39. Investments by a private equity fund in a publicly traded company - usually at a discount.
Limited Partnership Agreement
private investment in public equities (PIPE)
Common Stock
equity financing
40. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
management buy-out (MBO)
capital gain
Liquidation Preference
Pre-money valuation
41. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
General Partner (GP)
Senior Stock
Limited Partner
Liquidation Preference
42. 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 -
limited partnerships
IPO (Initial Public Offering)
General Partner (GP)
Qualified IPO
43. 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.
Deal Structure
Subordinated Debt
leverage buy-out(LBO)
benchmarks
44. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
Angel Financing
small business investment companies (SBIC)
minority enterprise small business investment companies (MESBICS)
45. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Series A Preferred Stock
Capital
raising capital
S Corporation
46. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Book Value
Post-money
Membership Interest
Equity
47. Document between general and limited partnership of each fund spells out details of the partnership.
series a preferred stock
Bootstrapping
Limited Partnership Agreement
Venture Capital Financing
48. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Angel Financing
seed capital
secondary public offering
buyout
49. 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.
Outstanding Stock
benchmarks
IPO (Initial Public Offering)
lock-up period
50. Pre-money valuation plus the amount invested in the latest round
Post-money
IRR
PPM
Market Capitalization