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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. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
closing
Common Stock
Venture Capital Financing
equity offerings
2. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
C Corporation
Corporation (Limited liability and taxation)
leverage buy-out(LBO)
Subordinated Debt
3. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.
Outstanding Stock
Term Sheet
NDA (Non-disclosure agreement)
Capital
4. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project
syndication
Preferred Stock
equity financing
Lead Investor
5. The equity ownership in a corporation. Also has basic voting rights
Common Stock
angel investors
seed capital
syndication
6. The internal rate of return on an investment.
Closing
exit
return on investment (ROI)
seed capital
7. 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
benchmarks
Senior Stock
General Partner (GP)
executive summary
8. 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
Preferred Stock
Capital Call 'Drawdown'
private equity
Subordinated Debt
9. Compound internal rate of return.
Seed Money
IRR
closing
Preferred Stock
10. A security with limits on its transferability. Usually issued in connection with a private placement
mezzanine financing
Pre-money valuation
closing
Restricted Stock
11. Term sheet for equity offering
capital under management
Term Sheet
limited partnerships
Deal Structure
12. 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.
Warrants
IPO(initial public offerings)
General Partner (GP)
liquidation
13. 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.
Elevator Pitch
Venture Capital Financing
Common Stock
exit
14. 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
exit route
Common Stock
Internal Rate of Return
Dividends
15. 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 -
Limited Partnership Agreement
PPM
Market Capitalization
limited partnerships
16. 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
Common Equity
Preferred Stock
Outstanding Stock
Elevator Pitch
17. 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.
Bootstrapping
Business Plan
Internal Rate of Return
lock-up period
18. 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.
Pre-Money Valuation
benchmarks
acquisition
closing
19. 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
Senior Stock
secondary public offering
Limited Partner
debt financing
20. 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.
lead investor
Qualified IPO
angel investors
due diligence
21. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
Book Value
secondary purchase
PPM
22. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Venture Capitalist
Limited Partner
S Corporation
23. The method by which an investor will realize an investment.
liquidation
Liquidation
exit route
Series A Preferred Stock
24. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
angel investors
due diligence
Warrants
secondary purchase
25. Date the LP's subscription is effective and they become partner
exit
Closing
Corporation (Limited liability and taxation)
NDA (Non-disclosure agreement)
26. 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.
Stock Price Agreement
equity financing
return on investment (ROI)
Deal Structure
27. 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
Anti-Dilution Protections
Liquidation Preference
follow-on
angel investors
28. An investment vehicle designed to invest in a diversified group of investment funds.
equity financing
Liquidation Preference
fund of funds
minority enterprise small business investment companies (MESBICS)
29. 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
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30. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
secondary public offering
NDA (Non-disclosure agreement)
Common Equity
Anti-Dilution Protections
31. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
fund of funds
return on investment (ROI)
Warrants
Business Summary
32. The company or entity into which a fund invests directly.
follow-on
Term Sheet
portfolio compaay
seed capital
33. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Burn Rate
buyout
Pre-Money Valuation
Pre-Money Valuation
34. 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
lead investor
lock-up period
debt financing
Venture Capitalist
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.
Market Capitalization
Bootstrapping
NDA (Non-disclosure agreement)
angel investors
36. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
venture capital
capital under management
Business Summary
Limited Partner
37. 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
Business Plan
Capitalization Table
management buy-out (MBO)
NDA (Non-disclosure agreement)
38. 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.
going private
IPO (Initial Public Offering)
Bridge Financing
IRR
39. This refers to obtaining capital from investors or venture capital sources.
Senior Stock
Capital Commitment
Voting Rights
raising capital
40. 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
Pre-Money Valuation
Anti-Dilution Protections
Lead Investor
Cash-out election
41. The practice of a large company taking a minority equity position in a smaller company in a related field.
Outstanding Stock
corporate venturing
minority enterprise small business investment companies (MESBICS)
acquisition
42. 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.
Liquidation
Due Diligence
leverage buy-out(LBO)
recapitalization
43. A business owned by stockholders who share in its profits but are not personally responsible for its debts
lock-up period
capital under management
Corporation (Limited liability and taxation)
return on investment (ROI)
44. The party that manages a limited partnership and is liable for the debts of the company
secondary purchase
C Corporation
Common Stock
General Partner (GP)
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.
Elevator Pitch
Market Capitalization
Membership Interest
Preferred Stock
46. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
NDA (Non-disclosure agreement)
turnaround
Liquidation
secondary purchase
47. 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
private equity
small business investment companies (SBIC)
Common Stock
Seed Money
48. 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
Restricted Shares
Preferred Stock
follow-on
Pre-Money Valuation
49. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
angel investors
NDA (Non-disclosure agreement)
due diligence
Book Value
50. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.
acquisition
minority enterprise small business investment companies (MESBICS)
Business Summary
No Shop/Confidentiality