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. 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






2. A business owned by stockholders who share in its profits but are not personally responsible for its debts






3. 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) ...






4. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






5. 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






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






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






8. 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






9. 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.






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






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






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






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






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






16. 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






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






18. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






19. The way you buy stock






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






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






22. 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.






23. 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






24. 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.






25. 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






26. How much the company is worth before an investment






27. Document between general and limited partnership of each fund spells out details of the partnership.






28. 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






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






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






31. 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.






32. 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.






33. 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






34. Issue of shares of a company to the public by the company (directly) for the first time.






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






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






37. 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.






38. 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.






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






40. 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






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






42. 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






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






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






45. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






46. 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






47. 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.






48. 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.






49. An IPO that has met certain






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