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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. Investments by a private equity fund in a publicly traded company - usually at a discount.
fund of funds
private investment in public equities (PIPE)
Limited Partnership Agreement
Senior Stock
2. A study of the background and financial reliability of the company - management team and industry.
limited partnerships
benchmarks
Conversion Rights
Due Diligence
3. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
benchmarks
follow-on
Due Diligence
4. The company or entity into which a fund invests directly.
portfolio compaay
equity financing
Qualified IPO
General Partner (GP)
5. Letter of intent summarizing the key legal and financial terms
Term Sheet
S Corporation
Seed Money
Liquidation Preference
6. 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.
Bootstrapping
benchmarks
exit
Warrants
7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
syndication
Qualified IPO
Outstanding Stock
8. 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.
acquisition
Pre-Money Valuation
Internal Rate of Return
Adjusted Book Value
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
Anti-Dilution Protections
Liquidation Preference
Capital Call 'Drawdown'
venture capital
10. 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
Liquidity Event
seed capital
Dividends
Venture Capital Financing
11. 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.
Equity
follow-on
Qualified IPO
Elevator Pitch
12. How much the company is worth before an investment
Pre-Money Valuation
raising capital
closing
Term Sheet
13. 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
private equity
Preferred Stock
going private
Dividends
14. How you get out
Liquidation Preference
Book Value
exit
PPM
15. An IPO that has met certain
Common Stock
Restricted Shares
Qualified IPO
Adjusted Book Value
16. 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
lock-up period
Deal Structure
going private
Business Plan
17. 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
Cash-out election
bridge loans
S Corporation
Series A Preferred Stock
18. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Liquidation
buyout
Limited Partner
turnaround
19. 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
IPO (Initial Public Offering)
seed capital
institutional investors
20. Assets are subject to double taxation - Unlimited number of investors
exit
corporate venturing
C Corporation
IPO(initial public offerings)
21. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project
Preferred Stock
Cash-out election
seed capital
Lead Investor
22. 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
Post-Money Valuation
Liquidation Preference
C Corporation
private investment in public equities (PIPE)
23. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Preferred Stock
Book Value
Conversion Rights
Preferred Stock
24. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Equity
seed capital
Qualified IPO
Warrants
25. 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.
Bridge Financing
debt financing
Elevator Pitch
buyout
26. This refers to a synopsis of the key points of a business plan.
series a preferred stock
Post-money
executive summary
Bridge Financing
27. Compound internal rate of return.
Series A Preferred Stock
raising capital
Burn Rate
IRR
28. 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.
Initial Public Offering
mezzanine financing
Lead Investor
Liquidity Event
29. How you get to vote
Qualified IPO
Venture Capitalist
Voting Rights
Post-Money Valuation
30. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Term Sheet
Membership Interest
Business Summary
31. 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
Pre-money valuation
Equity
Venture Capitalist
lock-up period
32. 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.
management buy-out (MBO)
Closing
venture capital
Seed Money
33. 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
Business Summary
Preferred Stock
Venture Capitalist
Pre-Money Valuation
34. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
management buy-out (MBO)
secondary purchase
C Corporation
Common Equity
35. 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
Limited Partner
PPM
Angel Financing
lead investor
36. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
small business investment companies (SBIC)
equity offerings
debt financing
37. 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.
Private Equity
liquidation
Liquidation Preference
Initial Public Offering
38. 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
Market Capitalization
IPO(initial public offerings)
going private
private investment in public equities (PIPE)
39. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
Book Value
Business Summary
Pre-Money Valuation
40. 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.).
leverage buy-out(LBO)
Subordinated Debt
IPO(initial public offerings)
institutional investors
41. This refers to obtaining capital from investors or venture capital sources.
Closing
Capitalization Table
Outstanding Stock
raising capital
42. 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
debt financing
Term Sheet
Seed Money
Business Summary
43. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
series a preferred stock
Outstanding Stock
Capitalization Table
44. 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.
limited partnerships
minority enterprise small business investment companies (MESBICS)
institutional investors
Seed Money
45. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
Seed Money
Liquidation Preference
Post-Money Valuation
46. Selling an interest in your business to an outside party to raise money.
Bridge Financing
equity financing
Outstanding Stock
turnaround
47. The amount of this available to a management team for venture investments.
Deal Structure
management buy-out (MBO)
Liquidity Event
capital under management
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.
Cash-out election
lead investor
Warrants
syndication
49. 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-in (MBI)
leverage buy-out(LBO)
due diligence
Market Capitalization
50. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Market Capitalization
IPO(initial public offerings)
capital gain
exit route