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. 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.






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






3. 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






4. 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






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






6. The internal rate of return on an investment.






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






8. How much the company is worth before an investment






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






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






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






12. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






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






14. 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






15. 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.






16. 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.






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






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






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






20. An IPO that has met certain






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






22. Term sheet for equity offering






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






24. 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






25. 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.






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






27. 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






28. 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






29. 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.






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






31. Cannot get other outside investors-No Shop






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






33. 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.).






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






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






36. 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






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






38. Document between general and limited partnership of each fund spells out details of the partnership.






39. 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 -






40. 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






41. 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






42. 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






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






44. How you get out






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






46. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






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






49. 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.






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