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






2. An IPO that has met certain






3. 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






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






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






6. 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






7. 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






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






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






10. 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.






11. 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






12. Term sheet for equity offering






13. 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.






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






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






16. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






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.






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






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






20. 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.






21. 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.






22. 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






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






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






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






26. 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.






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






28. 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.






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






30. How much the company is worth before an investment






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






32. 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






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






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






35. 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.






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






37. A business owned by stockholders who share in its profits but are not personally responsible for its debts






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






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






40. 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.






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 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






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






44. The internal rate of return on an investment.






45. 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






46. The equity ownership in a corporation. Also has basic voting rights






47. Cannot get other outside investors-No Shop






48. 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






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






50. Compound internal rate of return.