Test your basic knowledge |

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. 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






2. 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.






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






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






5. The internal rate of return on an investment.






6. 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.






7. 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.).






8. 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






9. 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






10. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






11. 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






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






13. 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.






14. Compound internal rate of return.






15. 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






16. Pre-money valuation plus the amount invested in the latest round






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






18. 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






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






20. How you get out






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






22. No double tax - Limited number of investors






23. 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






24. 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.






25. 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






26. 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.






27. How much the company is worth before an investment






28. Term sheet for equity offering






29. How you get to vote






30. 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.






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






32. 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.






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






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






35. 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






36. 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.






37. 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






38. 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






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 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.






41. 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






42. 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.






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






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






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






46. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






47. 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






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






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






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