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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. 'I will buy stock at price we negotiate'
Angel Financing
Post-Money Valuation
Stock Price Agreement
Common Equity
2. 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
bridge loans
return on investment (ROI)
Equity
mezzanine financing
3. 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
Preferred Stock
Anti-Dilution Protections
Confidentiality
Initial Public Offering
4. 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.
S Corporation
Business Summary
Preferred Stock
turnaround
5. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Subordinated Debt
Venture Capitalist
Capital
6. This refers to a synopsis of the key points of a business plan.
going private
Dividends
executive summary
Membership Interest
7. Don't talk to the market about the company
exit
S Corporation
Confidentiality
No Shop/Confidentiality
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
Conversion Rights
private equity
angel investors
S Corporation
9. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
IPO(initial public offerings)
Pre-Money Valuation
equity offerings
IPO (Initial Public Offering)
10. 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.
exit
closing
Venture Capital Financing
Capital
11. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
small business investment companies (SBIC)
Initial Public Offering
exit
angel investors
12. 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
Preferred Stock
Capitalization Table
corporate venturing
follow-on
13. 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
leverage buy-out(LBO)
Bootstrapping
follow-on
series a preferred stock
14. 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.
syndication
angel investors
equity financing
Stock Price Agreement
15. 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
management buy-out (MBO)
Series A Preferred Stock
angel investors
Capital
16. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
minority enterprise small business investment companies (MESBICS)
Term Sheet
Senior Stock
17. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
Private Equity
portfolio compaay
Bootstrapping
18. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
Capital Commitment
Liquidation
syndication
19. 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
Closing
Subordinated Debt
IPO (Initial Public Offering)
exit route
20. The method by which an investor will realize an investment.
S Corporation
Adjusted Book Value
exit route
Limited Partnership Agreement
21. 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
Outstanding Stock
syndication
Restricted Shares
Market Capitalization
22. 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.).
Liquidity Event
Common Equity
Adjusted Book Value
institutional investors
23. 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
leverage buy-out(LBO)
closing
Business Plan
exit route
24. 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
Pre-Money Valuation
Private Equity
Equity
management buy-in (MBI)
25. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Preferred Stock
Corporation (Limited liability and taxation)
IRR
26. 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
venture capital
Due Diligence
seed capital
leverage buy-out(LBO)
27. 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.
Warrants
Qualified IPO
liquidation
Voting Rights
28. 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.
Restricted Stock
debt financing
acquisition
Adjusted Book Value
29. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Capital Commitment
Stock Price Agreement
equity financing
Conversion Rights
30. Date the LP's subscription is effective and they become partner
limited partnerships
Private Equity
Adjusted Book Value
Closing
31. 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.
Preferred Stock
Burn Rate
limited partnerships
management buy-out (MBO)
32. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
return on investment (ROI)
Closing
management buy-in (MBI)
IPO(initial public offerings)
33. 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
going private
Seed Money
management buy-out (MBO)
institutional investors
34. How you get to vote
Elevator Pitch
Voting Rights
raising capital
Preferred Stock
35. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
limited partnerships
Liquidity Event
Voting Rights
Internal Rate of Return
36. How you get out
Common Stock
raising capital
Liquidation Preference
leverage buy-out(LBO)
37. The practice of a large company taking a minority equity position in a smaller company in a related field.
management buy-out (MBO)
Warrants
Capital Call 'Drawdown'
corporate venturing
38. 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.
Series A Preferred Stock
lock-up period
Post-Money Valuation
Preferred Stock
39. Selling an interest in your business to an outside party to raise money.
equity financing
exit route
series a preferred stock
venture capital
40. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Preferred Stock
Internal Rate of Return
Corporation (Limited liability and taxation)
Senior Stock
41. Investments by a private equity fund in a publicly traded company - usually at a discount.
Pre-money valuation
NDA (Non-disclosure agreement)
Capital Commitment
private investment in public equities (PIPE)
42. A study of the background and financial reliability of the company - management team and industry.
Bootstrapping
Corporation (Limited liability and taxation)
Due Diligence
Equity
43. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Post-Money Valuation
secondary purchase
private equity
syndication
44. Term sheet for equity offering
Capitalization Table
executive summary
Term Sheet
Preferred Stock
45. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
equity offerings
angel investors
Term Sheet
turnaround
46. The company or entity into which a fund invests directly.
Capital Commitment
recapitalization
portfolio compaay
Liquidation
47. 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.
mezzanine financing
Burn Rate
Conversion Rights
Due Diligence
48. 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
seed capital
Capital
liquidation
follow-on
49. 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
General Partner (GP)
equity offerings
Dividends
seed capital
50. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Burn Rate
small business investment companies (SBIC)
recapitalization