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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. 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
Capitalization Table
Angel Financing
recapitalization
Venture Capitalist
2. 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.
Term Sheet
Equity
mezzanine financing
buyout
3. The way you buy stock
Post-money
Term Sheet
PPM
equity offerings
4. Letter of intent summarizing the key legal and financial terms
Adjusted Book Value
lead investor
Capital
Term Sheet
5. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
management buy-out (MBO)
angel investors
recapitalization
Common Stock
6. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
limited partnerships
turnaround
bridge loans
Liquidity Event
7. 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
limited partnerships
minority enterprise small business investment companies (MESBICS)
Restricted Stock
seed capital
8. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Cash-out election
NDA (Non-disclosure agreement)
debt financing
Common Equity
9. 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
Liquidation Preference
lock-up period
Common Equity
private equity
10. No double tax - Limited number of investors
S Corporation
follow-on
Term Sheet
Liquidity Event
11. 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.
Elevator Pitch
syndication
lock-up period
lead investor
12. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
exit route
syndication
Post-Money Valuation
13. 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
Preferred Stock
Voting Rights
Initial Public Offering
Pre-money valuation
14. Term sheet for equity offering
Term Sheet
IPO (Initial Public Offering)
Series A Preferred Stock
Lead Investor
15. 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.
Preferred Stock
follow-on
going private
Common Stock
16. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
Liquidation
corporate venturing
Closing
17. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Pre-money valuation
exit route
angel investors
exit
18. How you get to vote
Term Sheet
General Partner (GP)
Voting Rights
equity financing
19. 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
Common Stock
No Shop/Confidentiality
Bootstrapping
Limited Partnership Agreement
20. The party that manages a limited partnership and is liable for the debts of the company
follow-on
Term Sheet
General Partner (GP)
Business Summary
21. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi
Equity
benchmarks
Corporation (Limited liability and taxation)
lock-up period
22. The internal rate of return on an investment.
return on investment (ROI)
mezzanine financing
Closing
exit route
23. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-out (MBO)
equity offerings
General Partner (GP)
management buy-in (MBI)
24. Compound internal rate of return.
Restricted Shares
Dividends
IRR
C Corporation
25. Cannot get other outside investors-No Shop
portfolio compaay
No Shop/Confidentiality
lead investor
exit route
26. 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.
Capital
Common Stock
Market Capitalization
turnaround
27. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will
Term Sheet
Voting Rights
IPO(initial public offerings)
Post-Money Valuation
28. 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.
equity offerings
Bootstrapping
Business Plan
private equity
29. 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.
Business Summary
Preferred Stock
small business investment companies (SBIC)
due diligence
30. The residual ownership in a company like a corporation or LLC 51%=control
fund of funds
C Corporation
Equity
Post-Money Valuation
31. 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
syndication
limited partnerships
Restricted Stock
32. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Deal Structure
Corporation (Limited liability and taxation)
follow-on
Liquidation Preference
33. 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
Capital Call 'Drawdown'
closing
venture capital
benchmarks
34. Document between general and limited partnership of each fund spells out details of the partnership.
IPO(initial public offerings)
Post-Money Valuation
benchmarks
Limited Partnership Agreement
35. 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
Business Summary
Bootstrapping
raising capital
36. 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
Capital Commitment
series a preferred stock
Pre-Money Valuation
Common Stock
37. This refers to a synopsis of the key points of a business plan.
Capital Call 'Drawdown'
Business Plan
executive summary
Market Capitalization
38. 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
Dividends
Membership Interest
Bridge Financing
Qualified IPO
39. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
Business Summary
Outstanding Stock
Warrants
40. The practice of a large company taking a minority equity position in a smaller company in a related field.
private equity
Liquidation Preference
corporate venturing
Subordinated Debt
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
Qualified IPO
Restricted Shares
Senior Stock
Adjusted Book Value
42. 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
No Shop/Confidentiality
going private
private investment in public equities (PIPE)
Series A Preferred Stock
43. 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
Bootstrapping
Cash-out election
Liquidity Event
Stock Price Agreement
44. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
C Corporation
buyout
portfolio compaay
closing
45. 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
Due Diligence
secondary purchase
small business investment companies (SBIC)
S Corporation
46. An IPO that has met certain
raising capital
Qualified IPO
acquisition
institutional investors
47. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
mezzanine financing
due diligence
raising capital
portfolio compaay
48. 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.
Limited Partner
syndication
Internal Rate of Return
Pre-Money Valuation
49. 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.
syndication
lead investor
private equity
portfolio compaay
50. 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
equity offerings
Outstanding Stock
Venture Capitalist
minority enterprise small business investment companies (MESBICS)