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






2. 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.






3. The total value of the company immediately prior to the latest round of financing






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






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






6. 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.






7. 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






8. Cannot get other outside investors-No Shop






9. 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.






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






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






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






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






14. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






16. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






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






18. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






19. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






20. No double tax - Limited number of investors






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






22. 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






23. 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


24. 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






25. 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.






26. 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






27. 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






28. 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






29. 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.






30. 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.






31. 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






32. 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.






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






34. 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.






35. 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






36. 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






37. 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






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






39. This refers to a synopsis of the key points of a business plan.






40. 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.






41. 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.






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






43. How you get to vote






44. 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






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






46. 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






47. 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.






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






49. 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






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