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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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.).






2. 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






3. No double tax - Limited number of investors






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






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






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






7. 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.






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






9. 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.






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






11. How much the company is worth before an investment






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






13. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






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






15. The internal rate of return on an investment.






16. 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






17. 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.






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






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






20. 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






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






22. 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






23. Compound internal rate of return.






24. 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) ...






25. Term sheet for equity offering






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






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






28. How you get out






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






30. 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.






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






32. The equity ownership in a corporation. Also has basic voting rights






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






34. 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






35. 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.






36. 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 -






37. 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






38. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi






39. 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






40. 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






41. 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






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






43. 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






44. 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






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






46. 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.






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






48. 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






49. This refers to obtaining capital from investors or venture capital sources.






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