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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. 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.
Liquidation
small business investment companies (SBIC)
mezzanine financing
secondary public offering
2. 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
Common Stock
Subordinated Debt
private investment in public equities (PIPE)
Capitalization Table
3. The rate at which a company expends net cash over a certain period - usually a month.
return on investment (ROI)
Business Summary
Bridge Financing
Burn Rate
4. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Common Stock
term sheet
angel investors
5. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
equity offerings
Internal Rate of Return
Burn Rate
6. 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
Post-money
Cash-out election
Angel Financing
due diligence
7. 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.
minority enterprise small business investment companies (MESBICS)
going private
Warrants
Deal Structure
8. 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.
Bridge Financing
Membership Interest
Voting Rights
Limited Partner
9. 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.
going private
IPO (Initial Public Offering)
Preferred Stock
Business Plan
10. This refers to obtaining capital from investors or venture capital sources.
Post-Money Valuation
General Partner (GP)
liquidation
raising capital
11. 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
Due Diligence
management buy-in (MBI)
Liquidity Event
12. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Pre-Money Valuation
recapitalization
buyout
Post-Money Valuation
13. Don't talk to the market about the company
Confidentiality
Burn Rate
Bootstrapping
Restricted Stock
14. 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
PPM
Preferred Stock
Qualified IPO
Limited Partnership Agreement
15. The company or entity into which a fund invests directly.
exit route
portfolio compaay
buyout
Post-money
16. How you get to vote
bridge loans
Voting Rights
seed capital
recapitalization
17. Pre-money valuation plus the amount invested in the latest round
Post-money
IPO (Initial Public Offering)
venture capital
Limited Partner
18. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
angel investors
term sheet
lead investor
19. Compound internal rate of return.
Liquidity Event
IRR
seed capital
General Partner (GP)
20. 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
portfolio compaay
secondary purchase
Membership Interest
21. 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
Outstanding Stock
bridge loans
closing
Private Equity
22. 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.).
turnaround
Liquidation Preference
institutional investors
venture capital
23. 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.
General Partner (GP)
lock-up period
debt financing
Initial Public Offering
24. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
lock-up period
Common Equity
Stock Price Agreement
C Corporation
25. This refers to a synopsis of the key points of a business plan.
executive summary
due diligence
turnaround
Seed Money
26. The value at which an asset is carried on a balance sheet (the cost of the item)
venture capital
Book Value
Warrants
closing
27. Date the LP's subscription is effective and they become partner
C Corporation
Venture Capitalist
Closing
Business Plan
28. 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
benchmarks
Common Stock
Limited Partner
Common Equity
29. 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) ...
Corporation (Limited liability and taxation)
Initial Public Offering
Private Equity
executive summary
30. An IPO that has met certain
Adjusted Book Value
Qualified IPO
Deal Structure
secondary purchase
31. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
capital gain
angel investors
exit
Adjusted Book Value
32. 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
Initial Public Offering
Dividends
Post-Money Valuation
Voting Rights
33. Term sheet for equity offering
Term Sheet
return on investment (ROI)
IPO (Initial Public Offering)
equity financing
34. The internal rate of return on an investment.
return on investment (ROI)
secondary purchase
Business Plan
Initial Public Offering
35. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
Closing
mezzanine financing
Lead Investor
36. Document between general and limited partnership of each fund spells out details of the partnership.
Conversion Rights
management buy-out (MBO)
Limited Partnership Agreement
institutional investors
37. 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
private equity
Venture Capitalist
equity offerings
Market Capitalization
38. 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
follow-on
Book Value
small business investment companies (SBIC)
Seed Money
39. Issue of shares of a company to the public by the company (directly) for the first time.
Confidentiality
Internal Rate of Return
Common Equity
IPO(initial public offerings)
40. The residual ownership in a company like a corporation or LLC 51%=control
PPM
exit
Equity
executive summary
41. 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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42. 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.
lock-up period
liquidation
Adjusted Book Value
Business Plan
43. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Common Equity
Angel Financing
lock-up period
S Corporation
44. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
Conversion Rights
Senior Stock
term sheet
45. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Stock Price Agreement
exit route
Corporation (Limited liability and taxation)
syndication
46. 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
Confidentiality
Pre-Money Valuation
recapitalization
lock-up period
47. 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.
Bootstrapping
Burn Rate
exit
IPO (Initial Public Offering)
48. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Private Equity
leverage buy-out(LBO)
Deal Structure
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
exit
Seed Money
Bridge Financing
Closing
50. Selling an interest in your business to an outside party to raise money.
management buy-out (MBO)
equity financing
Capital Call 'Drawdown'
secondary public offering