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






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 total value of the company immediately prior to the latest round of financing






4. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






6. 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






7. 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.






8. Date the LP's subscription is effective and they become partner






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






10. 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.






11. 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


12. 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) ...






13. 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






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






15. An IPO that has met certain






16. No double tax - Limited number of investors






17. Term sheet for equity offering






18. The practice of a large company taking a minority equity position in a smaller company in a related field.






19. 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






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






21. How you get out






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






23. 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






24. 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






25. How much the company is worth before an investment






26. 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






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






28. 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






29. 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






30. 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.






31. 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.






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






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






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






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






36. 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






37. 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.






38. 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.






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






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






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






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






43. Compound internal rate of return.






44. 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.






45. 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.






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






47. 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.






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






49. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






50. 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