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 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






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






3. 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






4. 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






5. The party that manages a limited partnership and is liable for the debts of the company






6. The internal rate of return on an investment.






7. 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






8. 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.






9. How you get to vote






10. 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






11. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






12. 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.






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






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






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






16. 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






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.






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






19. 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.






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






21. 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






22. 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






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






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






25. 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






26. 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






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






28. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






29. An IPO that has met certain






30. 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


31. 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






32. 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.






33. The way you buy stock






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






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






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






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






38. Compound internal rate of return.






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






40. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






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






42. 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.






43. 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.






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.






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






46. 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.






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






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






49. 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






50. 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.