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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. Letter of intent summarizing the key legal and financial terms
Term Sheet
Preferred Stock
Dividends
institutional investors
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.
going private
Initial Public Offering
mezzanine financing
Pre-Money Valuation
3. 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
Limited Partner
Liquidation
No Shop/Confidentiality
4. How much the company is worth before an investment
NDA (Non-disclosure agreement)
Pre-Money Valuation
Post-Money Valuation
No Shop/Confidentiality
5. The rate of return or profit that an investment is expected to earn.
Voting Rights
S Corporation
closing
Internal Rate of Return
6. Issue of shares of a company to the public by the company (directly) for the first time.
going private
Series A Preferred Stock
IPO(initial public offerings)
minority enterprise small business investment companies (MESBICS)
7. 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
Private Equity
Restricted Shares
capital under management
Book Value
8. Term sheet for equity offering
Post-Money Valuation
Lead Investor
Outstanding Stock
Term Sheet
9. 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
syndication
Membership Interest
exit route
Preferred Stock
10. 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
NDA (Non-disclosure agreement)
Closing
seed capital
11. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Post-Money Valuation
Capital
Equity
Confidentiality
12. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
liquidation
closing
debt financing
C Corporation
13. 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
IRR
Due Diligence
Market Capitalization
limited partnerships
14. The practice of a large company taking a minority equity position in a smaller company in a related field.
bridge loans
angel investors
Capital
corporate venturing
15. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
Membership Interest
Common Stock
Limited Partnership Agreement
16. 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.
Limited Partner
Subordinated Debt
IPO (Initial Public Offering)
Outstanding Stock
17. 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
portfolio compaay
leverage buy-out(LBO)
Subordinated Debt
18. 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
Equity
Closing
equity offerings
19. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Capital Commitment
corporate venturing
institutional investors
buyout
20. The method by which an investor will realize an investment.
management buy-out (MBO)
Book Value
exit route
Liquidity Event
21. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
leverage buy-out(LBO)
Seed Money
exit
S Corporation
22. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
syndication
Corporation (Limited liability and taxation)
executive summary
23. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Burn Rate
exit route
turnaround
Angel Financing
24. The party that manages a limited partnership and is liable for the debts of the company
Liquidity Event
lead investor
Angel Financing
General Partner (GP)
25. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Liquidation
exit route
Closing
26. 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
General Partner (GP)
follow-on
fund of funds
seed capital
27. A study of the background and financial reliability of the company - management team and industry.
No Shop/Confidentiality
Due Diligence
Liquidity Event
Lead Investor
28. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
due diligence
Senior Stock
Limited Partnership Agreement
benchmarks
29. The internal rate of return on an investment.
return on investment (ROI)
Preferred Stock
Preferred Stock
Book Value
30. 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
Common Stock
Burn Rate
buyout
31. The value at which an asset is carried on a balance sheet (the cost of the item)
Stock Price Agreement
Bootstrapping
Book Value
series a preferred stock
32. 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
Business Plan
Lead Investor
mezzanine financing
Common Stock
33. 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.
Business Summary
Bootstrapping
Voting Rights
PPM
34. 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.
portfolio compaay
Venture Capital Financing
management buy-out (MBO)
Conversion Rights
35. An investment vehicle designed to invest in a diversified group of investment funds.
Adjusted Book Value
fund of funds
private investment in public equities (PIPE)
leverage buy-out(LBO)
36. 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)
Cash-out election
Confidentiality
due diligence
37. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Corporation (Limited liability and taxation)
buyout
small business investment companies (SBIC)
limited partnerships
38. 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
portfolio compaay
institutional investors
Business Plan
small business investment companies (SBIC)
39. 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
Liquidation Preference
Elevator Pitch
mezzanine financing
equity offerings
40. 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.
Pre-Money Valuation
management buy-in (MBI)
equity financing
follow-on
41. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Equity
C Corporation
Liquidation
small business investment companies (SBIC)
42. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Membership Interest
series a preferred stock
Outstanding Stock
capital gain
43. Selling an interest in your business to an outside party to raise money.
equity financing
Common Stock
Lead Investor
Conversion Rights
44. The way you buy stock
lead investor
Series A Preferred Stock
PPM
closing
45. 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
Venture Capitalist
Seed Money
NDA (Non-disclosure agreement)
Limited Partnership Agreement
46. 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
IPO (Initial Public Offering)
debt financing
Term Sheet
Capitalization Table
47. 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.
exit route
Common Stock
Capital Call 'Drawdown'
liquidation
48. 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.
minority enterprise small business investment companies (MESBICS)
return on investment (ROI)
Conversion Rights
buyout
49. 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
Dividends
Limited Partner
Angel Financing
Common Stock
50. 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
benchmarks
raising capital
Liquidation
closing