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 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.






2. 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






3. 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






4. 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.






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






6. 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






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






8. 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.






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






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






11. Compound internal rate of return.






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






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






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






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






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






17. 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






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






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






20. 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.






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






22. 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






23. 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






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






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






26. 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






27. 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






28. 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






29. How you get to vote






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






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






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






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






34. How much the company is worth before an investment






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






36. 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






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






38. 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.






39. 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) ...






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






41. The internal rate of return on an investment.






42. 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






43. 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






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






45. 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.






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






47. 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






48. 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






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






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.