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. Selling an interest in your business to an outside party to raise money.






2. 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






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






4. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






5. Term sheet for equity offering






6. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment

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7. Pre-money valuation plus the amount invested in the latest round






8. 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






9. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






11. 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.






12. 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.






13. 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.






14. 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






15. 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.






16. 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






17. 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.






18. 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






19. 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.






20. Don't talk to the market about the company






21. 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






22. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






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






24. An IPO that has met certain






25. 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






26. Assets are subject to double taxation - Unlimited number of investors






27. No double tax - Limited number of investors






28. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






29. The way you buy stock






30. 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






31. 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






32. 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.






33. How you get to vote






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






35. 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.






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






37. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






38. The company or entity into which a fund invests directly.






39. A business owned by stockholders who share in its profits but are not personally responsible for its debts






40. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






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






42. 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






43. 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.






44. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






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






47. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






49. 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






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