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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. How much the company is worth before an investment
Preferred Stock
exit
Pre-Money Valuation
debt financing
2. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
going private
angel investors
Initial Public Offering
secondary purchase
3. 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
Elevator Pitch
Capital Call 'Drawdown'
Confidentiality
Lead Investor
4. 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
Preferred Stock
Liquidation Preference
Seed Money
Anti-Dilution Protections
5. 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
lead investor
Lead Investor
bridge loans
Preferred Stock
6. The company or entity into which a fund invests directly.
portfolio compaay
Post-Money Valuation
Restricted Stock
Common Stock
7. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
portfolio compaay
Stock Price Agreement
due diligence
Private Equity
8. 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.
follow-on
portfolio compaay
IRR
corporate venturing
9. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
management buy-out (MBO)
Qualified IPO
Capitalization Table
10. 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.
secondary public offering
liquidation
lead investor
small business investment companies (SBIC)
11. 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
Cash-out election
Preferred Stock
Initial Public Offering
benchmarks
12. 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.
Elevator Pitch
mezzanine financing
Voting Rights
Capital Call 'Drawdown'
13. Selling an interest in your business to an outside party to raise money.
Term Sheet
Limited Partner
private investment in public equities (PIPE)
equity financing
14. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Seed Money
Post-Money Valuation
Adjusted Book Value
minority enterprise small business investment companies (MESBICS)
15. The residual ownership in a company like a corporation or LLC 51%=control
Conversion Rights
Equity
Business Summary
debt financing
16. 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
management buy-in (MBI)
series a preferred stock
secondary purchase
equity financing
17. 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
minority enterprise small business investment companies (MESBICS)
venture capital
Internal Rate of Return
Venture Capitalist
18. 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
exit
Burn Rate
seed capital
turnaround
19. 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.
minority enterprise small business investment companies (MESBICS)
Common Stock
No Shop/Confidentiality
Venture Capital Financing
20. 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
lead investor
Business Plan
term sheet
Voting Rights
21. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Pre-Money Valuation
Angel Financing
Confidentiality
Liquidity Event
22. 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
Liquidation Preference
Limited Partnership Agreement
IPO(initial public offerings)
lead investor
23. A study of the background and financial reliability of the company - management team and industry.
Confidentiality
Liquidation Preference
raising capital
Due Diligence
24. 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
Deal Structure
Senior Stock
benchmarks
Business Summary
25. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Restricted Shares
Liquidation
raising capital
Warrants
26. Assets are subject to double taxation - Unlimited number of investors
raising capital
secondary purchase
C Corporation
closing
27. Term sheet for equity offering
Post-money
Bridge Financing
Term Sheet
minority enterprise small business investment companies (MESBICS)
28. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
secondary purchase
turnaround
Corporation (Limited liability and taxation)
29. 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
small business investment companies (SBIC)
Preferred Stock
Pre-Money Valuation
No Shop/Confidentiality
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Lead Investor
small business investment companies (SBIC)
Capital
Private Equity
31. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
angel investors
management buy-in (MBI)
buyout
executive summary
32. 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
Outstanding Stock
Dividends
IPO(initial public offerings)
follow-on
33. 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.
secondary purchase
due diligence
Bootstrapping
private equity
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.
acquisition
Venture Capitalist
Senior Stock
Cash-out election
35. 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.
Deal Structure
Dividends
Senior Stock
Membership Interest
36. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
private investment in public equities (PIPE)
Equity
Membership Interest
corporate venturing
37. 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.
Liquidation Preference
Preferred Stock
Restricted Stock
Business Summary
38. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Capital Call 'Drawdown'
Elevator Pitch
Liquidation Preference
Liquidation
39. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
acquisition
Common Stock
lead investor
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
term sheet
acquisition
Warrants
venture capital
41. 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
Capital
Seed Money
term sheet
private equity
42. 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
General Partner (GP)
Preferred Stock
Initial Public Offering
PPM
43. How you get out
recapitalization
Liquidation Preference
management buy-out (MBO)
Corporation (Limited liability and taxation)
44. 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.
minority enterprise small business investment companies (MESBICS)
debt financing
Qualified IPO
Outstanding Stock
45. No double tax - Limited number of investors
S Corporation
NDA (Non-disclosure agreement)
Capital Call 'Drawdown'
C Corporation
46. 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
secondary public offering
Post-Money Valuation
Market Capitalization
Private Equity
47. 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.
Equity
mezzanine financing
Conversion Rights
term sheet
48. The total value of the company immediately prior to the latest round of financing
management buy-out (MBO)
follow-on
closing
Pre-money valuation
49. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Market Capitalization
equity offerings
Preferred Stock
Restricted Stock
50. Letter of intent summarizing the key legal and financial terms
Term Sheet
private investment in public equities (PIPE)
equity financing
capital gain