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






2. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






3. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






4. 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.






5. 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






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






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






8. 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






9. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






10. How you get to vote






11. 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.






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






13. 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






14. The way you buy stock






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






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






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






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






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






20. How you get out






21. Document between general and limited partnership of each fund spells out details of the partnership.






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






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






24. The rate of return or profit that an investment is expected to earn.






25. 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.






26. 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.






27. 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






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






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






30. 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.).






31. 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






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






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






34. 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






35. How much the company is worth before an investment






36. 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






37. 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.






38. 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.






39. Cannot get other outside investors-No Shop






40. 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.






41. 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






42. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






43. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






44. 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






45. 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.






46. 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






47. 'I will buy stock at price we negotiate'






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






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






50. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity