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






2. 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.






3. 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.






4. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






6. 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.






7. 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.).






8. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






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






10. 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






11. 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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12. 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






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






14. No double tax - Limited number of investors






15. 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.






16. 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.






17. Letter of intent summarizing the key legal and financial terms






18. 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






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






20. Cannot get other outside investors-No Shop






21. An investment vehicle designed to invest in a diversified group of investment funds.






22. 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






23. The way you buy stock






24. 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 -






25. The internal rate of return on an investment.






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






27. How much the company is worth before an investment






28. 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






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






30. 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.






31. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






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






33. 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






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






35. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






36. Term sheet for equity offering






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






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






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






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






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






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






43. 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






44. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






45. 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.






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






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






48. 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.






49. How you get out






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