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Test your basic knowledge |
Venture Capital
Start Test
Study First
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 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
Market Capitalization
equity offerings
Capital Commitment
Liquidity Event
2. 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.
Subordinated Debt
lock-up period
capital gain
IRR
3. 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.
General Partner (GP)
recapitalization
minority enterprise small business investment companies (MESBICS)
Business Plan
4. 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.
follow-on
raising capital
Senior Stock
Equity
5. A study of the background and financial reliability of the company - management team and industry.
follow-on
Qualified IPO
Due Diligence
Post-money
6. 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
Voting Rights
secondary purchase
seed capital
Lead Investor
7. 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.
Subordinated Debt
No Shop/Confidentiality
syndication
Series A Preferred Stock
8. 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.
mezzanine financing
limited partnerships
Corporation (Limited liability and taxation)
Preferred Stock
9. 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
Voting Rights
Qualified IPO
Preferred Stock
Deal Structure
10. 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
Lead Investor
Burn Rate
Preferred Stock
Term Sheet
11. 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
return on investment (ROI)
Qualified IPO
Series A Preferred Stock
secondary public offering
12. 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.
Series A Preferred Stock
private investment in public equities (PIPE)
portfolio compaay
recapitalization
13. 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
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14. 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.
Liquidation Preference
Private Equity
lead investor
Liquidity Event
15. The party that manages a limited partnership and is liable for the debts of the company
minority enterprise small business investment companies (MESBICS)
follow-on
General Partner (GP)
Pre-Money Valuation
16. The internal rate of return on an investment.
Liquidation Preference
Venture Capitalist
leverage buy-out(LBO)
return on investment (ROI)
17. 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.
Bridge Financing
liquidation
Book Value
exit route
18. 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) ...
Initial Public Offering
seed capital
minority enterprise small business investment companies (MESBICS)
Burn Rate
19. 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
acquisition
Confidentiality
going private
lead investor
20. Date the LP's subscription is effective and they become partner
Business Plan
Post-Money Valuation
S Corporation
Closing
21. 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
Term Sheet
IPO (Initial Public Offering)
Elevator Pitch
Angel Financing
22. 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
Preferred Stock
Lead Investor
Common Stock
capital under management
23. 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
syndication
Senior Stock
Business Plan
Angel Financing
24. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
limited partnerships
Warrants
Qualified IPO
IRR
25. 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
C Corporation
Warrants
Common Stock
Pre-Money Valuation
26. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
No Shop/Confidentiality
Private Equity
Equity
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
Common Stock
secondary public offering
Initial Public Offering
liquidation
28. Issue of shares of a company to the public by the company (directly) for the first time.
due diligence
Liquidity Event
Post-Money Valuation
IPO(initial public offerings)
29. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Preferred Stock
corporate venturing
Capital
closing
30. 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
Venture Capitalist
Common Equity
debt financing
Term Sheet
31. Don't talk to the market about the company
Preferred Stock
Confidentiality
Term Sheet
Membership Interest
32. 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
Book Value
Venture Capitalist
Outstanding Stock
minority enterprise small business investment companies (MESBICS)
33. The equity ownership in a corporation. Also has basic voting rights
Bootstrapping
equity financing
buyout
Common Stock
34. 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
Venture Capitalist
Dividends
Liquidation Preference
corporate venturing
35. 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.
Capital Call 'Drawdown'
venture capital
acquisition
Limited Partner
36. 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.
Limited Partner
corporate venturing
Common Equity
Deal Structure
37. 'I will buy stock at price we negotiate'
IRR
capital under management
Liquidity Event
Stock Price Agreement
38. The maximum amount of cash that a partner is required to contribute under the terms
follow-on
syndication
benchmarks
Capital Commitment
39. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
angel investors
IRR
Pre-money valuation
Anti-Dilution Protections
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
secondary public offering
Anti-Dilution Protections
Restricted Shares
Deal Structure
41. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Venture Capital Financing
Angel Financing
Seed Money
buyout
42. 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.
liquidation
secondary public offering
seed capital
fund of funds
43. 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.
equity offerings
Equity
Voting Rights
Venture Capital Financing
44. 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
Common Stock
Capital Call 'Drawdown'
IPO (Initial Public Offering)
buyout
45. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Preferred Stock
NDA (Non-disclosure agreement)
lock-up period
Elevator Pitch
46. Assets are subject to double taxation - Unlimited number of investors
Subordinated Debt
venture capital
Liquidation Preference
C Corporation
47. 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.
Market Capitalization
Voting Rights
IRR
turnaround
48. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Adjusted Book Value
exit route
liquidation
secondary purchase
49. No double tax - Limited number of investors
Series A Preferred Stock
lead investor
management buy-in (MBI)
S Corporation
50. How much the company is worth before an investment
Adjusted Book Value
capital under management
leverage buy-out(LBO)
Pre-Money Valuation