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






2. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






3. 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.






4. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






5. 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


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






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






8. 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






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






10. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






11. Compound internal rate of return.






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






13. Cannot get other outside investors-No Shop






14. The company or entity into which a fund invests directly.






15. 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.






16. 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






17. No double tax - Limited number of investors






18. 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.






19. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






20. 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






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






22. 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






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






24. 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.






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






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






27. 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.






28. 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






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






30. 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






31. 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.






32. 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






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






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






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






36. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






37. 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.






38. 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






39. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






40. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






42. How you get out






43. An IPO that has met certain






44. How you get to vote






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






46. The residual ownership in a company like a corporation or LLC 51%=control






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






48. 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 -






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






50. 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.