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 equity ownership in a corporation. Also has basic voting rights






2. 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.






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






4. This refers to a synopsis of the key points of a business plan.






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






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






7. 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






8. How much the company is worth before an investment






9. 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






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






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






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






13. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.






14. 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 -






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






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






17. Cannot get other outside investors-No Shop






18. 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






19. 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






20. 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






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






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






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






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






26. 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.






27. 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






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






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






30. 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






31. 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.






32. How you get to vote






33. 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






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






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






37. A study of the background and financial reliability of the company - management team and industry.






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






39. 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.






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






41. An IPO that has met certain






42. 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






43. The amount of this available to a management team for venture investments.






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. 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






46. Compound internal rate of return.






47. 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






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






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






50. 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.