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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. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Capital Call 'Drawdown'
Subordinated Debt
small business investment companies (SBIC)
Liquidation
2. Letter of intent summarizing the key legal and financial terms
management buy-out (MBO)
Term Sheet
buyout
Seed Money
3. 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
4. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
seed capital
raising capital
due diligence
5. 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.
secondary public offering
Bootstrapping
mezzanine financing
Confidentiality
6. The way you buy stock
Preferred Stock
PPM
Corporation (Limited liability and taxation)
Preferred Stock
7. 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 -
limited partnerships
Pre-Money Valuation
raising capital
Capitalization Table
8. 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
minority enterprise small business investment companies (MESBICS)
Limited Partner
Adjusted Book Value
No Shop/Confidentiality
9. 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
Warrants
Deal Structure
Liquidation Preference
Venture Capitalist
10. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Book Value
Conversion Rights
Capital
Common Equity
11. Assets are subject to double taxation - Unlimited number of investors
Stock Price Agreement
institutional investors
Post-money
C Corporation
12. The total value of the company immediately prior to the latest round of financing
equity offerings
Pre-money valuation
Bridge Financing
Limited Partnership Agreement
13. Compound internal rate of return.
Anti-Dilution Protections
IRR
Pre-Money Valuation
secondary public offering
14. 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
Liquidation
Common Equity
Preferred Stock
exit route
15. The equity ownership in a corporation. Also has basic voting rights
capital gain
Common Stock
Limited Partner
Liquidation Preference
16. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Limited Partner
Liquidation Preference
NDA (Non-disclosure agreement)
Internal Rate of Return
17. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Pre-money valuation
closing
venture capital
18. An investment vehicle designed to invest in a diversified group of investment funds.
Book Value
liquidation
fund of funds
PPM
19. 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) ...
Burn Rate
Deal Structure
Initial Public Offering
Internal Rate of Return
20. 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
Pre-money valuation
Dividends
Limited Partnership Agreement
private investment in public equities (PIPE)
21. 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.
recapitalization
Venture Capital Financing
fund of funds
minority enterprise small business investment companies (MESBICS)
22. 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.
No Shop/Confidentiality
Dividends
mezzanine financing
management buy-out (MBO)
23. 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
Series A Preferred Stock
Common Equity
liquidation
Venture Capital Financing
24. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Common Stock
liquidation
syndication
capital gain
25. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Business Summary
acquisition
Liquidation Preference
26. 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
Market Capitalization
Initial Public Offering
Equity
Deal Structure
27. 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
Restricted Stock
mezzanine financing
Business Plan
equity offerings
28. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l
Venture Capitalist
institutional investors
bridge loans
lock-up period
29. 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.
benchmarks
Preferred Stock
acquisition
Capital Commitment
30. How you get out
Liquidation Preference
raising capital
equity financing
Closing
31. Pre-money valuation plus the amount invested in the latest round
No Shop/Confidentiality
seed capital
Pre-Money Valuation
Post-money
32. 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
Restricted Shares
term sheet
private equity
series a preferred stock
33. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Limited Partner
Senior Stock
venture capital
Initial Public Offering
34. The practice of a large company taking a minority equity position in a smaller company in a related field.
turnaround
series a preferred stock
corporate venturing
recapitalization
35. 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
Qualified IPO
Private Equity
Preferred Stock
benchmarks
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.
Due Diligence
lock-up period
portfolio compaay
recapitalization
37. 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
IPO (Initial Public Offering)
Private Equity
Angel Financing
small business investment companies (SBIC)
38. This refers to obtaining capital from investors or venture capital sources.
raising capital
Private Equity
Closing
small business investment companies (SBIC)
39. 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
closing
small business investment companies (SBIC)
Pre-Money Valuation
turnaround
40. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.
management buy-out (MBO)
recapitalization
private equity
Outstanding Stock
41. 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
Capital Call 'Drawdown'
Elevator Pitch
Angel Financing
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
acquisition
Burn Rate
leverage buy-out(LBO)
seed capital
43. The company or entity into which a fund invests directly.
syndication
Pre-Money Valuation
Business Plan
portfolio compaay
44. 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
IPO (Initial Public Offering)
recapitalization
benchmarks
Capitalization Table
45. 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.
Pre-Money Valuation
Preferred Stock
Equity
Confidentiality
46. The party that manages a limited partnership and is liable for the debts of the company
Adjusted Book Value
Due Diligence
Burn Rate
General Partner (GP)
47. 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
Closing
angel investors
Burn Rate
Preferred Stock
48. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Book Value
Corporation (Limited liability and taxation)
Common Stock
49. 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
Deal Structure
fund of funds
Common Stock
Elevator Pitch
50. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
IPO (Initial Public Offering)
Liquidation
Confidentiality
Capital Commitment