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






2. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






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






4. Letter of intent summarizing the key legal and financial terms






5. 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






6. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






7. 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.






8. How you get to vote






9. Date the LP's subscription is effective and they become partner






10. Cannot get other outside investors-No Shop






11. 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.






12. 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






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






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






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






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






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. 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 -






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






20. 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






21. 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.






22. 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.






23. 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






24. 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.






25. 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






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






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






28. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






29. 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.






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






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






32. Compound internal rate of return.






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






34. 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






35. A security with limits on its transferability. Usually issued in connection with a private placement






36. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






37. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






38. The method by which an investor will realize an investment.






39. 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






40. Investments by a private equity fund in a publicly traded company - usually at a discount.






41. 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






42. 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






43. How much the company is worth before an investment






44. 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






45. 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






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






47. 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






48. 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.






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






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