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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. Selling an interest in your business to an outside party to raise money.
Business Plan
equity financing
Preferred Stock
Initial Public Offering
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
portfolio compaay
Post-money
Elevator Pitch
management buy-in (MBI)
3. Letter of intent summarizing the key legal and financial terms
Subordinated Debt
Market Capitalization
Conversion Rights
Term Sheet
4. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
leverage buy-out(LBO)
Common Equity
fund of funds
exit
5. Term sheet for equity offering
Term Sheet
capital gain
IRR
benchmarks
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
portfolio compaay
Post-money
Burn Rate
equity offerings
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
lock-up period
Preferred Stock
Cash-out election
Liquidation Preference
9. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
lock-up period
Book Value
due diligence
Capital Call 'Drawdown'
10. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
return on investment (ROI)
Qualified IPO
Membership Interest
executive summary
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.
fund of funds
turnaround
Term Sheet
Elevator Pitch
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.
Outstanding Stock
Series A Preferred Stock
Stock Price Agreement
acquisition
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.
Venture Capitalist
liquidation
minority enterprise small business investment companies (MESBICS)
Elevator Pitch
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
Liquidation Preference
Series A Preferred Stock
Seed Money
Term Sheet
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.
term sheet
Business Plan
Capital Call 'Drawdown'
liquidation
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
raising capital
seed capital
small business investment companies (SBIC)
management buy-out (MBO)
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.
Bootstrapping
IRR
Common Stock
syndication
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
term sheet
Adjusted Book Value
Preferred Stock
IPO(initial public offerings)
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.
Bootstrapping
Dividends
debt financing
due diligence
20. Don't talk to the market about the company
Burn Rate
Confidentiality
Book Value
mezzanine financing
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
Stock Price Agreement
C Corporation
Term Sheet
Market Capitalization
22. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
mezzanine financing
equity financing
secondary public offering
23. Date the LP's subscription is effective and they become partner
Closing
Due Diligence
follow-on
S Corporation
24. An IPO that has met certain
Liquidation
No Shop/Confidentiality
management buy-out (MBO)
Qualified IPO
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
equity financing
Private Equity
No Shop/Confidentiality
Seed Money
26. Assets are subject to double taxation - Unlimited number of investors
Qualified IPO
due diligence
Warrants
C Corporation
27. No double tax - Limited number of investors
management buy-in (MBI)
S Corporation
Book Value
leverage buy-out(LBO)
28. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Corporation (Limited liability and taxation)
closing
Capital
fund of funds
29. The way you buy stock
IPO(initial public offerings)
Capitalization Table
PPM
recapitalization
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
Series A Preferred Stock
lock-up period
Venture Capitalist
closing
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
Limited Partnership Agreement
Initial Public Offering
Pre-money valuation
going private
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.
NDA (Non-disclosure agreement)
lead investor
Preferred Stock
Outstanding Stock
33. How you get to vote
Common Stock
Voting Rights
lead investor
Initial Public Offering
34. Issue of shares of a company to the public by the company (directly) for the first time.
Burn Rate
Private Equity
venture capital
IPO(initial public offerings)
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.
exit route
management buy-in (MBI)
limited partnerships
term sheet
36. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
lock-up period
NDA (Non-disclosure agreement)
Confidentiality
Business Plan
37. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Common Stock
equity offerings
Preferred Stock
Liquidation
38. The company or entity into which a fund invests directly.
bridge loans
Subordinated Debt
Business Summary
portfolio compaay
39. A business owned by stockholders who share in its profits but are not personally responsible for its debts
raising capital
Stock Price Agreement
Corporation (Limited liability and taxation)
Cash-out election
40. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
going private
Restricted Stock
closing
secondary purchase
41. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Preferred Stock
Liquidity Event
Post-Money Valuation
Bridge Financing
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
No Shop/Confidentiality
Common Equity
follow-on
IPO (Initial Public Offering)
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.
Pre-Money Valuation
Venture Capital Financing
secondary purchase
Senior Stock
44. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Due Diligence
capital under management
Confidentiality
Angel Financing
45. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
private equity
Capitalization Table
Membership Interest
46. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
private equity
raising capital
Common Stock
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
Conversion Rights
going private
management buy-in (MBI)
Bridge Financing
48. The equity ownership in a corporation. Also has basic voting rights
Preferred Stock
turnaround
Common Stock
capital gain
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
Subordinated Debt
Venture Capitalist
capital gain
Post-Money Valuation
50. The total value of the company immediately prior to the latest round of financing
return on investment (ROI)
Pre-money valuation
capital gain
capital under management