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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 way you buy stock
PPM
venture capital
exit
Market Capitalization
2. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Voting Rights
secondary purchase
lock-up period
3. Date the LP's subscription is effective and they become partner
buyout
Closing
PPM
Bridge Financing
4. 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
Elevator Pitch
Term Sheet
benchmarks
management buy-in (MBI)
5. 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
debt financing
Restricted Shares
capital gain
Warrants
6. 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
Cash-out election
Outstanding Stock
Equity
Post-Money Valuation
7. How you get to vote
acquisition
Voting Rights
limited partnerships
Corporation (Limited liability and taxation)
8. 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
Capitalization Table
series a preferred stock
Angel Financing
Outstanding Stock
9. 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
Elevator Pitch
lead investor
Business Plan
management buy-out (MBO)
10. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Venture Capital Financing
term sheet
Warrants
Business Summary
11. 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.
executive summary
General Partner (GP)
recapitalization
Bootstrapping
12. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Liquidation Preference
buyout
Deal Structure
Preferred Stock
13. Pre-money valuation plus the amount invested in the latest round
Post-money
mezzanine financing
Adjusted Book Value
acquisition
14. 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.
Post-money
Angel Financing
Business Plan
lock-up period
15. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Angel Financing
Capitalization Table
mezzanine financing
Common Equity
16. 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.
syndication
limited partnerships
Closing
Restricted Shares
17. No double tax - Limited number of investors
Capitalization Table
S Corporation
Adjusted Book Value
Term Sheet
18. The equity ownership in a corporation. Also has basic voting rights
management buy-out (MBO)
Senior Stock
Pre-money valuation
Common Stock
19. 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
Market Capitalization
acquisition
Venture Capital Financing
20. 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
Business Summary
turnaround
follow-on
21. 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
Pre-money valuation
capital under management
Seed Money
private equity
22. 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
Preferred Stock
going private
angel investors
Post-money
23. The company or entity into which a fund invests directly.
S Corporation
portfolio compaay
venture capital
equity offerings
24. A study of the background and financial reliability of the company - management team and industry.
mezzanine financing
Due Diligence
IRR
Membership Interest
25. 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.
term sheet
raising capital
Liquidation Preference
Subordinated Debt
26. Compound internal rate of return.
executive summary
debt financing
Restricted Shares
IRR
27. 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
Common Equity
secondary purchase
Subordinated Debt
28. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
management buy-out (MBO)
small business investment companies (SBIC)
Burn Rate
29. 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.
exit route
bridge loans
portfolio compaay
secondary public offering
30. 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
mezzanine financing
Confidentiality
benchmarks
IPO (Initial Public Offering)
31. 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.
syndication
Internal Rate of Return
Deal Structure
PPM
32. 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
venture capital
Capital Call 'Drawdown'
Private Equity
33. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Common Stock
syndication
Common Stock
Adjusted Book Value
34. The amount of this available to a management team for venture investments.
capital under management
leverage buy-out(LBO)
Deal Structure
small business investment companies (SBIC)
35. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
equity financing
Bridge Financing
Liquidity Event
Confidentiality
36. 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.
Internal Rate of Return
Dividends
Preferred Stock
term sheet
37. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Preferred Stock
limited partnerships
Subordinated Debt
Burn Rate
38. 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.
Voting Rights
Business Summary
acquisition
Private Equity
39. 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
going private
Post-Money Valuation
Post-money
raising capital
40. 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
IPO (Initial Public Offering)
turnaround
Pre-Money Valuation
Private Equity
41. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
fund of funds
exit
NDA (Non-disclosure agreement)
equity financing
42. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Warrants
Capital Call 'Drawdown'
Liquidation
Bootstrapping
43. The value at which an asset is carried on a balance sheet (the cost of the item)
bridge loans
Due Diligence
mezzanine financing
Book Value
44. 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
recapitalization
Capitalization Table
leverage buy-out(LBO)
Preferred Stock
45. This refers to obtaining capital from investors or venture capital sources.
raising capital
Subordinated Debt
Preferred Stock
exit
46. 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
IPO(initial public offerings)
Common Stock
small business investment companies (SBIC)
Corporation (Limited liability and taxation)
47. Cannot get other outside investors-No Shop
Seed Money
No Shop/Confidentiality
going private
General Partner (GP)
48. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Preferred Stock
No Shop/Confidentiality
Capitalization Table
49. 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
Seed Money
private equity
return on investment (ROI)
Term Sheet
50. 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
Venture Capitalist
leverage buy-out(LBO)
Due Diligence
raising capital