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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. Cannot get other outside investors-No Shop
term sheet
private investment in public equities (PIPE)
No Shop/Confidentiality
venture capital
2. 'I will buy stock at price we negotiate'
Initial Public Offering
venture capital
Stock Price Agreement
Equity
3. How you get out
Liquidation Preference
Initial Public Offering
Preferred Stock
capital gain
4. 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.
Pre-Money Valuation
minority enterprise small business investment companies (MESBICS)
Internal Rate of Return
secondary purchase
5. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Business Summary
private equity
Subordinated Debt
bridge loans
6. 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
Internal Rate of Return
Business Plan
C Corporation
Dividends
7. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
venture capital
Burn Rate
limited partnerships
8. 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.
lock-up period
Limited Partner
Liquidity Event
Venture Capital Financing
9. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
exit route
C Corporation
Business Summary
10. 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
bridge loans
series a preferred stock
liquidation
due diligence
11. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Preferred Stock
Internal Rate of Return
Adjusted Book Value
Stock Price Agreement
12. This refers to obtaining capital from investors or venture capital sources.
Burn Rate
raising capital
limited partnerships
Seed Money
13. 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 -
limited partnerships
angel investors
Capital Call 'Drawdown'
Capital Commitment
14. A study of the background and financial reliability of the company - management team and industry.
secondary public offering
executive summary
liquidation
Due Diligence
15. 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)
private equity
exit route
buyout
16. How you get to vote
Voting Rights
Deal Structure
Restricted Shares
fund of funds
17. 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
Common Stock
Membership Interest
PPM
Lead Investor
18. An IPO that has met certain
Qualified IPO
Liquidation
debt financing
Angel Financing
19. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Adjusted Book Value
Outstanding Stock
exit
bridge loans
20. 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
term sheet
Outstanding Stock
equity offerings
Limited Partner
21. Letter of intent summarizing the key legal and financial terms
Term Sheet
closing
Qualified IPO
raising capital
22. The method by which an investor will realize an investment.
closing
exit route
Business Summary
Confidentiality
23. 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
Capitalization Table
IPO(initial public offerings)
Cash-out election
Restricted Shares
24. 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
Preferred Stock
Venture Capital Financing
corporate venturing
Adjusted Book Value
25. This refers to a synopsis of the key points of a business plan.
Due Diligence
return on investment (ROI)
Liquidity Event
executive summary
26. 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
Voting Rights
benchmarks
Equity
Pre-money valuation
27. The internal rate of return on an investment.
private equity
Pre-Money Valuation
Preferred Stock
return on investment (ROI)
28. Compound internal rate of return.
Preferred Stock
Angel Financing
private investment in public equities (PIPE)
IRR
29. The company or entity into which a fund invests directly.
portfolio compaay
Qualified IPO
Burn Rate
lead investor
30. Assets are subject to double taxation - Unlimited number of investors
Voting Rights
C Corporation
Adjusted Book Value
Burn Rate
31. 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.
Book Value
Bridge Financing
Internal Rate of Return
venture capital
32. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
limited partnerships
seed capital
Liquidity Event
angel investors
33. 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.
secondary public offering
executive summary
NDA (Non-disclosure agreement)
acquisition
34. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
management buy-in (MBI)
Bridge Financing
PPM
35. Investments by a private equity fund in a publicly traded company - usually at a discount.
secondary purchase
corporate venturing
Venture Capitalist
private investment in public equities (PIPE)
36. Term sheet for equity offering
Term Sheet
Preferred Stock
follow-on
recapitalization
37. 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.
Seed Money
Membership Interest
management buy-out (MBO)
IPO (Initial Public Offering)
38. The amount of this available to a management team for venture investments.
fund of funds
series a preferred stock
venture capital
capital under management
39. 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.
Deal Structure
Capital Commitment
Outstanding Stock
seed capital
40. 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.
PPM
turnaround
Membership Interest
Capital Commitment
41. How much the company is worth before an investment
Limited Partner
exit route
private investment in public equities (PIPE)
Pre-Money Valuation
42. 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
Common Stock
Business Summary
Cash-out election
43. 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
Qualified IPO
Capital Call 'Drawdown'
limited partnerships
Private Equity
44. The total value of the company immediately prior to the latest round of financing
secondary purchase
Pre-money valuation
Adjusted Book Value
going private
45. The party that manages a limited partnership and is liable for the debts of the company
Capitalization Table
Membership Interest
General Partner (GP)
Limited Partner
46. 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.).
equity offerings
institutional investors
management buy-out (MBO)
PPM
47. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Voting Rights
Business Plan
Anti-Dilution Protections
Cash-out election
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.
lead investor
institutional investors
portfolio compaay
syndication
49. 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.
exit
Book Value
follow-on
Internal Rate of Return
50. The rate at which a company expends net cash over a certain period - usually a month.
Equity
acquisition
Burn Rate
return on investment (ROI)