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. 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






2. How you get to vote






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






4. 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 -






5. An IPO that has met certain






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






7. 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.






8. 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.






9. 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






10. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






11. 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






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






13. 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






14. 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) ...






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






16. How you get out






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






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






19. 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.






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






21. 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.






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






23. 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






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






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






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






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






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






29. 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






30. 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






31. How much the company is worth before an investment






32. 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.






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






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






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






36. 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






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






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






39. 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






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






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






42. 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.






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






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






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






46. The rate at which a company expends net cash over a certain period - usually a month.






47. The value at which an asset is carried on a balance sheet (the cost of the item)






48. 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.






49. Don't talk to the market about the company






50. 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