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 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






2. 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






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






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






5. 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.






6. 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) ...






7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






8. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






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






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






11. 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






12. 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






13. 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






14. 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.






15. How you get to vote






16. 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






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






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






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






20. An IPO that has met certain






21. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






22. Cannot get other outside investors-No Shop






23. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






24. 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.






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






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






27. 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.






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. 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.






30. 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.






31. 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






32. 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






33. The maximum amount of cash that a partner is required to contribute under the terms






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






35. 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






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






37. 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.






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






39. Term sheet for equity offering






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






41. 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






42. 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.






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






44. 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






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






46. Pre-money valuation plus the amount invested in the latest round






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






48. 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.






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






50. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no