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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. The rate of return or profit that an investment is expected to earn.
Market Capitalization
lock-up period
minority enterprise small business investment companies (MESBICS)
Internal Rate of Return
2. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Post-money
Common Stock
secondary purchase
3. 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.
Common Stock
follow-on
capital gain
Stock Price Agreement
4. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Dividends
recapitalization
minority enterprise small business investment companies (MESBICS)
Adjusted Book Value
5. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Burn Rate
due diligence
capital gain
Term Sheet
6. 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
Corporation (Limited liability and taxation)
Business Plan
corporate venturing
debt financing
7. This refers to obtaining capital from investors or venture capital sources.
Qualified IPO
raising capital
limited partnerships
management buy-out (MBO)
8. 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
private equity
IPO (Initial Public Offering)
secondary purchase
IRR
9. 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
Restricted Shares
buyout
Preferred Stock
Due Diligence
10. 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
Pre-Money Valuation
Seed Money
Limited Partnership Agreement
limited partnerships
11. How you get to vote
management buy-in (MBI)
Conversion Rights
Initial Public Offering
Voting Rights
12. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
recapitalization
Initial Public Offering
capital gain
13. 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.
Dividends
recapitalization
Pre-money valuation
term sheet
14. An IPO that has met certain
Initial Public Offering
Qualified IPO
minority enterprise small business investment companies (MESBICS)
Common Equity
15. 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
Closing
Conversion Rights
Capitalization Table
16. 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.
NDA (Non-disclosure agreement)
angel investors
secondary public offering
return on investment (ROI)
17. Document between general and limited partnership of each fund spells out details of the partnership.
exit route
Limited Partnership Agreement
S Corporation
acquisition
18. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Term Sheet
buyout
Senior Stock
Seed Money
19. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Common Equity
Limited Partnership Agreement
mezzanine financing
exit
20. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Capitalization Table
capital gain
Limited Partner
closing
21. How you get out
debt financing
Liquidation Preference
Subordinated Debt
Qualified IPO
22. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
closing
equity offerings
term sheet
benchmarks
23. Don't talk to the market about the company
series a preferred stock
Preferred Stock
Subordinated Debt
Confidentiality
24. 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
fund of funds
Series A Preferred Stock
Limited Partnership Agreement
Due Diligence
25. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
S Corporation
Senior Stock
PPM
executive summary
26. 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.).
institutional investors
Common Equity
Lead Investor
private equity
27. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Subordinated Debt
Warrants
C Corporation
Common Stock
28. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
acquisition
Lead Investor
IPO (Initial Public Offering)
Equity
29. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
Seed Money
capital gain
General Partner (GP)
30. 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
Conversion Rights
Qualified IPO
leverage buy-out(LBO)
31. 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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32. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Preferred Stock
institutional investors
S Corporation
33. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
mezzanine financing
Subordinated Debt
Common Equity
acquisition
34. The internal rate of return on an investment.
Limited Partner
mezzanine financing
return on investment (ROI)
Pre-Money Valuation
35. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Conversion Rights
leverage buy-out(LBO)
venture capital
Capital Commitment
36. 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
executive summary
Limited Partner
exit
equity offerings
37. 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) ...
Initial Public Offering
going private
Bridge Financing
Closing
38. The rate at which a company expends net cash over a certain period - usually a month.
Senior Stock
Corporation (Limited liability and taxation)
small business investment companies (SBIC)
Burn Rate
39. 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.
series a preferred stock
Deal Structure
leverage buy-out(LBO)
syndication
40. 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
equity offerings
exit route
management buy-out (MBO)
Common Stock
41. 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
series a preferred stock
Preferred Stock
Venture Capital Financing
Membership Interest
42. 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
Burn Rate
Venture Capital Financing
venture capital
Closing
43. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the
going private
raising capital
General Partner (GP)
equity offerings
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
IPO (Initial Public Offering)
Common Equity
seed capital
S Corporation
45. 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.
Outstanding Stock
capital gain
leverage buy-out(LBO)
Deal Structure
46. 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)
angel investors
series a preferred stock
Senior Stock
47. 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.
lead investor
Stock Price Agreement
Adjusted Book Value
exit route
48. 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
small business investment companies (SBIC)
lock-up period
Dividends
recapitalization
49. 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 -
Confidentiality
Warrants
Venture Capital Financing
limited partnerships
50. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
equity offerings
Closing
Burn Rate
Membership Interest