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. Issue of shares of a company to the public by the company (directly) for the first time.






2. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






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






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






5. 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.






6. 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






7. 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






8. 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.






9. 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






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






11. An IPO that has met certain






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






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






14. 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.






15. A security with limits on its transferability. Usually issued in connection with a private placement






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






17. 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) ...






18. 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






19. The way you buy stock






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






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. Selling an interest in your business to an outside party to raise money.






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






24. 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






25. 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






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






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






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






29. 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






30. Cannot get other outside investors-No Shop






31. 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






32. 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






33. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






34. 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.






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






36. 'I will buy stock at price we negotiate'






37. 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.






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






39. 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






40. 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






41. How much the company is worth before an investment






42. Compound internal rate of return.






43. Pre-money valuation plus the amount invested in the latest round






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






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






46. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






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






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






49. 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






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