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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. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
liquidation
term sheet
Market Capitalization
Business Summary
2. 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.
turnaround
Anti-Dilution Protections
Capital Call 'Drawdown'
lead investor
3. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
IPO(initial public offerings)
Common Stock
buyout
Liquidation Preference
4. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Lead Investor
equity financing
Corporation (Limited liability and taxation)
Preferred Stock
5. 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
capital under management
Limited Partnership Agreement
Preferred Stock
Seed Money
6. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
IPO (Initial Public Offering)
Senior Stock
capital gain
equity offerings
7. 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.
equity financing
exit
NDA (Non-disclosure agreement)
recapitalization
8. An IPO that has met certain
Elevator Pitch
Burn Rate
Qualified IPO
equity offerings
9. 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
follow-on
Capitalization Table
venture capital
Outstanding Stock
10. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
private investment in public equities (PIPE)
management buy-in (MBI)
closing
corporate venturing
11. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
Cash-out election
seed capital
General Partner (GP)
12. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Liquidation Preference
acquisition
Common Equity
Senior Stock
13. An investment vehicle designed to invest in a diversified group of investment funds.
Liquidation Preference
fund of funds
exit
Restricted Shares
14. 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
benchmarks
Adjusted Book Value
Business Plan
Common Stock
15. 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.
going private
Series A Preferred Stock
minority enterprise small business investment companies (MESBICS)
Restricted Stock
16. 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
exit
Limited Partner
Internal Rate of Return
Common Stock
17. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
capital gain
Angel Financing
exit
Venture Capitalist
18. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
secondary public offering
Post-Money Valuation
leverage buy-out(LBO)
acquisition
19. 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.
capital under management
liquidation
Liquidation Preference
Book Value
20. 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
Private Equity
Deal Structure
Subordinated Debt
Preferred Stock
21. Cannot get other outside investors-No Shop
Series A Preferred Stock
series a preferred stock
syndication
No Shop/Confidentiality
22. 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
Business Plan
raising capital
Venture Capitalist
Membership Interest
23. 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.
going private
syndication
Membership Interest
leverage buy-out(LBO)
24. 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.
corporate venturing
Capital
acquisition
angel investors
25. 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
Post-money
Dividends
private investment in public equities (PIPE)
Venture Capital Financing
26. 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
capital under management
General Partner (GP)
IPO (Initial Public Offering)
Elevator Pitch
27. The party that manages a limited partnership and is liable for the debts of the company
corporate venturing
Limited Partnership Agreement
General Partner (GP)
turnaround
28. The rate of return or profit that an investment is expected to earn.
Restricted Shares
Internal Rate of Return
going private
Bootstrapping
29. 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)
Initial Public Offering
Capital Call 'Drawdown'
Capital
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.
term sheet
seed capital
management buy-out (MBO)
leverage buy-out(LBO)
31. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Series A Preferred Stock
private equity
management buy-out (MBO)
32. 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
Series A Preferred Stock
Closing
Equity
33. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
bridge loans
turnaround
return on investment (ROI)
secondary purchase
34. Issue of shares of a company to the public by the company (directly) for the first time.
Qualified IPO
institutional investors
IPO(initial public offerings)
Senior Stock
35. 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
Adjusted Book Value
fund of funds
Market Capitalization
IPO (Initial Public Offering)
36. 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.
secondary purchase
Anti-Dilution Protections
management buy-out (MBO)
exit route
37. The value at which an asset is carried on a balance sheet (the cost of the item)
Pre-Money Valuation
Cash-out election
Book Value
fund of funds
38. 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
Restricted Stock
minority enterprise small business investment companies (MESBICS)
Term Sheet
39. 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.
return on investment (ROI)
Restricted Stock
Book Value
Outstanding Stock
40. Selling an interest in your business to an outside party to raise money.
venture capital
capital gain
equity financing
private investment in public equities (PIPE)
41. Letter of intent summarizing the key legal and financial terms
Term Sheet
lead investor
Adjusted Book Value
Qualified IPO
42. No double tax - Limited number of investors
S Corporation
Business Plan
Liquidation
capital under management
43. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Due Diligence
Capital
angel investors
venture capital
44. 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
Liquidation Preference
exit route
Capital
Subordinated Debt
45. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Business Summary
exit
Deal Structure
Membership Interest
46. Pre-money valuation plus the amount invested in the latest round
leverage buy-out(LBO)
Confidentiality
Post-money
Common Stock
47. Assets are subject to double taxation - Unlimited number of investors
Elevator Pitch
C Corporation
Corporation (Limited liability and taxation)
Capitalization Table
48. 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
Term Sheet
angel investors
Restricted Shares
term sheet
49. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Liquidation Preference
Internal Rate of Return
term sheet
50. The amount of this available to a management team for venture investments.
Confidentiality
capital under management
Common Stock
Liquidation Preference