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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. Assets are subject to double taxation - Unlimited number of investors
C Corporation
syndication
debt financing
Outstanding Stock
2. 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
going private
Dividends
Preferred Stock
executive summary
3. 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.).
Elevator Pitch
institutional investors
Series A Preferred Stock
Capitalization Table
4. 'I will buy stock at price we negotiate'
Stock Price Agreement
small business investment companies (SBIC)
Post-money
Lead Investor
5. Issue of shares of a company to the public by the company (directly) for the first time.
debt financing
corporate venturing
IPO(initial public offerings)
Post-Money Valuation
6. 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
Qualified IPO
private equity
Capitalization Table
Voting Rights
7. Compound internal rate of return.
turnaround
Preferred Stock
IRR
capital gain
8. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo
debt financing
IPO(initial public offerings)
minority enterprise small business investment companies (MESBICS)
Series A Preferred Stock
9. 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
Post-Money Valuation
Venture Capital Financing
capital gain
seed capital
10. 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
series a preferred stock
bridge loans
seed capital
Liquidation Preference
11. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
limited partnerships
Adjusted Book Value
capital gain
Post-Money Valuation
12. Cannot get other outside investors-No Shop
No Shop/Confidentiality
bridge loans
Initial Public Offering
series a preferred stock
13. 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
Adjusted Book Value
Capital Commitment
Preferred Stock
14. 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.
lock-up period
Outstanding Stock
minority enterprise small business investment companies (MESBICS)
lead investor
15. 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
Market Capitalization
Bootstrapping
NDA (Non-disclosure agreement)
Dividends
16. The amount of this available to a management team for venture investments.
capital under management
lock-up period
institutional investors
raising capital
17. 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.
Preferred Stock
Liquidation Preference
turnaround
Venture Capital Financing
18. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
corporate venturing
Preferred Stock
Venture Capital Financing
19. This refers to a synopsis of the key points of a business plan.
portfolio compaay
executive summary
buyout
Stock Price Agreement
20. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
secondary purchase
closing
series a preferred stock
minority enterprise small business investment companies (MESBICS)
21. 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
limited partnerships
Term Sheet
Preferred Stock
Private Equity
22. Pre-money valuation plus the amount invested in the latest round
Conversion Rights
Post-money
secondary purchase
NDA (Non-disclosure agreement)
23. 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
Business Plan
Preferred Stock
institutional investors
Dividends
24. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Series A Preferred Stock
acquisition
Initial Public Offering
Corporation (Limited liability and taxation)
25. The rate at which a company expends net cash over a certain period - usually a month.
exit route
Burn Rate
Post-money
Pre-Money Valuation
26. 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.
Series A Preferred Stock
Preferred Stock
institutional investors
lead investor
27. 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.
closing
Internal Rate of Return
secondary purchase
Outstanding Stock
28. 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.
minority enterprise small business investment companies (MESBICS)
closing
Pre-Money Valuation
leverage buy-out(LBO)
29. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
fund of funds
Liquidation
Private Equity
secondary purchase
30. 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)
raising capital
Bridge Financing
Post-Money Valuation
31. Don't talk to the market about the company
Capitalization Table
Deal Structure
Limited Partnership Agreement
Confidentiality
32. The practice of a large company taking a minority equity position in a smaller company in a related field.
due diligence
corporate venturing
IPO (Initial Public Offering)
Membership Interest
33. How much the company is worth before an investment
Conversion Rights
equity offerings
management buy-out (MBO)
Pre-Money Valuation
34. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Term Sheet
Pre-Money Valuation
Corporation (Limited liability and taxation)
35. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
lead investor
Due Diligence
Capitalization Table
36. 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
venture capital
raising capital
portfolio compaay
Liquidation Preference
37. 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.
Preferred Stock
Bridge Financing
Common Stock
Adjusted Book Value
38. The way you buy stock
PPM
Common Equity
Pre-Money Valuation
mezzanine financing
39. 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
fund of funds
liquidation
going private
40. This refers to obtaining capital from investors or venture capital sources.
raising capital
Preferred Stock
Subordinated Debt
NDA (Non-disclosure agreement)
41. 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
leverage buy-out(LBO)
IPO (Initial Public Offering)
Adjusted Book Value
Pre-Money Valuation
42. 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
recapitalization
series a preferred stock
Subordinated Debt
mezzanine financing
43. 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
capital under management
closing
Restricted Stock
Preferred Stock
44. 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.
IPO(initial public offerings)
Market Capitalization
Seed Money
mezzanine financing
45. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Capitalization Table
recapitalization
due diligence
PPM
46. The total value of the company immediately prior to the latest round of financing
Burn Rate
IPO (Initial Public Offering)
Pre-money valuation
General Partner (GP)
47. 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.
Due Diligence
No Shop/Confidentiality
syndication
term sheet
48. 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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49. The maximum amount of cash that a partner is required to contribute under the terms
corporate venturing
acquisition
Capital Commitment
closing
50. 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.
capital gain
Lead Investor
acquisition
Adjusted Book Value