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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. 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
Cash-out election
Capitalization Table
syndication
Dividends
2. 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.
Common Equity
Confidentiality
General Partner (GP)
Bridge Financing
3. 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
Voting Rights
Seed Money
management buy-out (MBO)
Restricted Stock
4. 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
Private Equity
Pre-Money Valuation
raising capital
Post-money
5. 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
Subordinated Debt
Liquidation
Liquidation Preference
6. 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.
angel investors
Qualified IPO
Pre-Money Valuation
syndication
7. 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)
benchmarks
Liquidity Event
Liquidation
8. No double tax - Limited number of investors
mezzanine financing
Initial Public Offering
S Corporation
Conversion Rights
9. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
benchmarks
Capital Call 'Drawdown'
Common Stock
IPO (Initial Public Offering)
10. An investment vehicle designed to invest in a diversified group of investment funds.
Capital
fund of funds
Initial Public Offering
debt financing
11. 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.
Lead Investor
lead investor
Venture Capital Financing
capital under management
12. 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
Burn Rate
Cash-out election
Post-money
Liquidation Preference
13. The party that manages a limited partnership and is liable for the debts of the company
Preferred Stock
Limited Partnership Agreement
General Partner (GP)
angel investors
14. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
IPO(initial public offerings)
Term Sheet
institutional investors
Adjusted Book Value
15. Selling an interest in your business to an outside party to raise money.
equity financing
syndication
Preferred Stock
secondary public offering
16. 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
return on investment (ROI)
follow-on
management buy-out (MBO)
venture capital
17. 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
seed capital
management buy-in (MBI)
Market Capitalization
Liquidation Preference
18. 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
management buy-out (MBO)
Senior Stock
due diligence
19. 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
Liquidation
Preferred Stock
Corporation (Limited liability and taxation)
Business Summary
20. The method by which an investor will realize an investment.
Deal Structure
exit route
recapitalization
syndication
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.
Conversion Rights
buyout
minority enterprise small business investment companies (MESBICS)
capital under management
22. 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
Capitalization Table
Burn Rate
Limited Partnership Agreement
Venture Capitalist
23. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Confidentiality
fund of funds
portfolio compaay
24. The amount of this available to a management team for venture investments.
limited partnerships
capital under management
Liquidation Preference
going private
25. Issue of shares of a company to the public by the company (directly) for the first time.
equity offerings
buyout
IPO(initial public offerings)
management buy-in (MBI)
26. 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
institutional investors
bridge loans
debt financing
closing
27. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
Cash-out election
Bridge Financing
Restricted Stock
28. 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.
Preferred Stock
liquidation
equity offerings
private investment in public equities (PIPE)
29. 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
Due Diligence
Pre-Money Valuation
Angel Financing
Post-Money Valuation
30. The way you buy stock
Deal Structure
Voting Rights
PPM
Corporation (Limited liability and taxation)
31. This refers to obtaining capital from investors or venture capital sources.
institutional investors
Adjusted Book Value
equity offerings
raising capital
32. The company or entity into which a fund invests directly.
portfolio compaay
series a preferred stock
Common Stock
Capital Call 'Drawdown'
33. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Bootstrapping
series a preferred stock
Angel Financing
IPO(initial public offerings)
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
Due Diligence
small business investment companies (SBIC)
Preferred Stock
Qualified IPO
35. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Liquidity Event
Warrants
Internal Rate of Return
Qualified IPO
36. 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.
secondary public offering
executive summary
Common Stock
exit
37. 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 -
Pre-Money Valuation
Private Equity
limited partnerships
leverage buy-out(LBO)
38. Investments by a private equity fund in a publicly traded company - usually at a discount.
Angel Financing
private investment in public equities (PIPE)
small business investment companies (SBIC)
Liquidation Preference
39. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Internal Rate of Return
corporate venturing
exit
syndication
40. 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.
private investment in public equities (PIPE)
Bootstrapping
equity offerings
institutional investors
41. Date the LP's subscription is effective and they become partner
capital under management
Closing
Elevator Pitch
Membership Interest
42. 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.
Preferred Stock
Corporation (Limited liability and taxation)
closing
Business Plan
43. The rate of return or profit that an investment is expected to earn.
series a preferred stock
fund of funds
Internal Rate of Return
Bootstrapping
44. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Warrants
corporate venturing
private investment in public equities (PIPE)
management buy-in (MBI)
45. 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.
Liquidation
capital gain
Deal Structure
Venture Capital Financing
46. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Private Equity
management buy-out (MBO)
Conversion Rights
47. 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
PPM
seed capital
executive summary
Capitalization Table
48. Don't talk to the market about the company
Limited Partnership Agreement
Liquidation
Equity
Confidentiality
49. 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.
Internal Rate of Return
lock-up period
Initial Public Offering
due diligence
50. 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
Pre-money valuation
Liquidation Preference
Senior Stock
return on investment (ROI)