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. How you get to vote






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






3. This refers to obtaining capital from investors or venture capital sources.






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






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






6. Partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment






7. An IPO that has met certain






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






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






10. 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






11. The method by which an investor will realize an investment.






12. 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.






13. 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.






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






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






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






17. 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.






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






19. How you get out






20. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






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






22. 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






23. 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






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






25. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






26. How much the company is worth before an investment






27. 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






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






29. 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






30. 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.






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






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






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






34. 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






35. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






36. 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.






37. 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.






38. No double tax - Limited number of investors






39. 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.






40. 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






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






42. The rate at which a company expends net cash over a certain period - usually a month.






43. 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






44. 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






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






46. Cannot get other outside investors-No Shop






47. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






48. 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






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






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