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. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






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






3. Term sheet for equity offering






4. 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






5. 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






6. 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






7. Don't talk to the market about the company






8. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






10. 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 -






11. 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.






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






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






14. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






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






16. 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.).






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






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






19. 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






20. 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






21. 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.






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






23. 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






24. How much the company is worth before an investment






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






26. 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.






27. 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






28. The way you buy stock






29. 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






30. 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.






31. The rate of return or profit that an investment is expected to earn.






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






33. 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






34. 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


35. The company or entity into which a fund invests directly.






36. 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.






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. 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.






39. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






40. 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






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






42. 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.






43. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






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






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.






46. 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.






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






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






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






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