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. 'I will buy stock at price we negotiate'






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






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






4. 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.






5. The value at which an asset is carried on a balance sheet (the cost of the item)






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






7. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






8. 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.






9. 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.).






10. 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






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






12. Date the LP's subscription is effective and they become partner






13. 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.






14. Issue of shares of a company to the public by the company (directly) for the first time.






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






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






17. 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.






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






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






20. The way you buy stock






21. An investment vehicle designed to invest in a diversified group of investment funds.






22. 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






23. The equity ownership in a corporation. Also has basic voting rights






24. 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.






25. 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.






26. 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






27. 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






28. The internal rate of return on an investment.






29. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






30. 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






31. 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






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






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






34. 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.






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






36. 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






37. How you get out






38. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






39. 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






40. Term sheet for equity offering






41. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






42. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






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






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






45. 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






46. Compound internal rate of return.






47. 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






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






49. 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.






50. 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