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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. 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.
Initial Public Offering
buyout
Term Sheet
secondary public offering
2. 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.
recapitalization
venture capital
mezzanine financing
Adjusted Book Value
3. 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
leverage buy-out(LBO)
PPM
Series A Preferred Stock
management buy-out (MBO)
4. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
corporate venturing
leverage buy-out(LBO)
secondary purchase
Warrants
5. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
IPO (Initial Public Offering)
Liquidation Preference
Post-money
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
Capitalization Table
going private
Liquidation Preference
due diligence
7. How you get out
Membership Interest
Dividends
Liquidation Preference
Pre-money valuation
8. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Capital Call 'Drawdown'
NDA (Non-disclosure agreement)
S Corporation
Preferred Stock
9. Assets are subject to double taxation - Unlimited number of investors
C Corporation
Restricted Stock
Liquidation
Due Diligence
10. 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.
fund of funds
management buy-out (MBO)
Elevator Pitch
Business Summary
11. This refers to a synopsis of the key points of a business plan.
private investment in public equities (PIPE)
return on investment (ROI)
Membership Interest
executive summary
12. 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
Venture Capitalist
private equity
Dividends
Capital Call 'Drawdown'
13. Selling an interest in your business to an outside party to raise money.
minority enterprise small business investment companies (MESBICS)
Initial Public Offering
going private
equity financing
14. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
IRR
Seed Money
series a preferred stock
Business Summary
15. The total value of the company immediately prior to the latest round of financing
syndication
private equity
Pre-money valuation
IRR
16. 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
Capital
Lead Investor
private investment in public equities (PIPE)
No Shop/Confidentiality
17. Pre-money valuation plus the amount invested in the latest round
Deal Structure
secondary purchase
Post-money
raising capital
18. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Liquidation Preference
No Shop/Confidentiality
Common Equity
institutional investors
19. Date the LP's subscription is effective and they become partner
Common Stock
PPM
Subordinated Debt
Closing
20. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c
Anti-Dilution Protections
Equity
capital under management
Pre-Money Valuation
21. A security with limits on its transferability. Usually issued in connection with a private placement
buyout
Pre-Money Valuation
Warrants
Restricted Stock
22. This refers to obtaining capital from investors or venture capital sources.
Business Plan
raising capital
Series A Preferred Stock
Post-money
23. 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.).
leverage buy-out(LBO)
PPM
limited partnerships
institutional investors
24. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Cash-out election
institutional investors
Voting Rights
25. 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
series a preferred stock
follow-on
Private Equity
Book Value
26. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Preferred Stock
Adjusted Book Value
Bridge Financing
lead investor
27. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Series A Preferred Stock
liquidation
No Shop/Confidentiality
28. 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
Seed Money
Market Capitalization
Anti-Dilution Protections
going private
29. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
lead investor
Restricted Stock
C Corporation
30. 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
Qualified IPO
fund of funds
Limited Partner
private investment in public equities (PIPE)
31. 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
leverage buy-out(LBO)
fund of funds
Post-Money Valuation
syndication
32. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
IPO (Initial Public Offering)
Capitalization Table
Preferred Stock
angel investors
33. A study of the background and financial reliability of the company - management team and industry.
syndication
Anti-Dilution Protections
Due Diligence
lock-up period
34. 'I will buy stock at price we negotiate'
Stock Price Agreement
Bootstrapping
executive summary
Restricted Stock
35. Investments by a private equity fund in a publicly traded company - usually at a discount.
IPO(initial public offerings)
No Shop/Confidentiality
private investment in public equities (PIPE)
equity financing
36. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
mezzanine financing
Bootstrapping
leverage buy-out(LBO)
term sheet
37. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Term Sheet
Corporation (Limited liability and taxation)
portfolio compaay
series a preferred stock
38. The rate at which a company expends net cash over a certain period - usually a month.
institutional investors
Term Sheet
Burn Rate
venture capital
39. 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
Dividends
Equity
secondary purchase
bridge loans
40. How much the company is worth before an investment
Outstanding Stock
Series A Preferred Stock
Subordinated Debt
Pre-Money Valuation
41. 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.
Cash-out election
syndication
IPO(initial public offerings)
lock-up period
42. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Limited Partner
due diligence
Post-money
exit route
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
Anti-Dilution Protections
Preferred Stock
Burn Rate
capital under management
44. 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
exit route
seed capital
Pre-Money Valuation
C Corporation
45. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Limited Partner
Senior Stock
capital under management
Venture Capitalist
46. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Dividends
closing
Preferred Stock
raising capital
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.
Common Stock
Pre-Money Valuation
syndication
Dividends
48. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Business Plan
Pre-Money Valuation
going private
49. Term sheet for equity offering
Term Sheet
Common Stock
Pre-Money Valuation
Series A Preferred Stock
50. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
IRR
management buy-in (MBI)
syndication
capital gain