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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. 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
private investment in public equities (PIPE)
Anti-Dilution Protections
Capital
2. Investments by a private equity fund in a publicly traded company - usually at a discount.
Business Summary
turnaround
private investment in public equities (PIPE)
Capital Call 'Drawdown'
3. 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
Angel Financing
Common Stock
going private
return on investment (ROI)
4. 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
Business Summary
No Shop/Confidentiality
Post-money
5. Don't talk to the market about the company
Confidentiality
secondary purchase
Corporation (Limited liability and taxation)
Preferred Stock
6. 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.
Senior Stock
Private Equity
capital gain
minority enterprise small business investment companies (MESBICS)
7. 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
Corporation (Limited liability and taxation)
benchmarks
management buy-in (MBI)
buyout
8. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.
Capitalization Table
IRR
Preferred Stock
Adjusted Book Value
9. 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.
Liquidation Preference
term sheet
syndication
Lead Investor
10. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Capital Call 'Drawdown'
Business Plan
lead investor
11. 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
small business investment companies (SBIC)
Venture Capitalist
Elevator Pitch
Conversion Rights
12. The practice of a large company taking a minority equity position in a smaller company in a related field.
Deal Structure
corporate venturing
bridge loans
closing
13. An IPO that has met certain
IPO(initial public offerings)
private equity
secondary purchase
Qualified IPO
14. 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.
buyout
Bridge Financing
S Corporation
bridge loans
15. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Preferred Stock
Outstanding Stock
Preferred Stock
Anti-Dilution Protections
16. 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)
Restricted Stock
term sheet
Elevator Pitch
17. 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.
buyout
lead investor
debt financing
syndication
18. A business owned by stockholders who share in its profits but are not personally responsible for its debts
IPO(initial public offerings)
Corporation (Limited liability and taxation)
C Corporation
PPM
19. The internal rate of return on an investment.
angel investors
return on investment (ROI)
Common Equity
No Shop/Confidentiality
20. 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
Angel Financing
Confidentiality
Venture Capitalist
General Partner (GP)
21. 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.).
institutional investors
No Shop/Confidentiality
small business investment companies (SBIC)
turnaround
22. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
benchmarks
going private
Elevator Pitch
NDA (Non-disclosure agreement)
23. 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
venture capital
IRR
Book Value
executive summary
24. 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.
Common Stock
Warrants
follow-on
Restricted Stock
25. 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
Liquidation Preference
Restricted Stock
Venture Capitalist
26. The method by which an investor will realize an investment.
private investment in public equities (PIPE)
Deal Structure
exit route
capital gain
27. How much the company is worth before an investment
liquidation
No Shop/Confidentiality
Pre-Money Valuation
small business investment companies (SBIC)
28. The rate at which a company expends net cash over a certain period - usually a month.
NDA (Non-disclosure agreement)
fund of funds
Capital Commitment
Burn Rate
29. The rate of return or profit that an investment is expected to earn.
Conversion Rights
Internal Rate of Return
Membership Interest
Limited Partner
30. 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.
turnaround
Common Stock
buyout
Capitalization Table
31. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Conversion Rights
Book Value
lead investor
32. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.
Liquidation
lock-up period
Liquidation Preference
lead investor
33. 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
Senior Stock
acquisition
Cash-out election
IPO (Initial Public Offering)
34. 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
Liquidation Preference
Venture Capital Financing
Confidentiality
35. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...
Restricted Stock
Burn Rate
Initial Public Offering
Anti-Dilution Protections
36. 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
Angel Financing
Dividends
limited partnerships
Subordinated Debt
37. 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
benchmarks
Market Capitalization
term sheet
seed capital
38. Selling an interest in your business to an outside party to raise money.
term sheet
Capital
equity financing
Lead Investor
39. 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
Subordinated Debt
Bootstrapping
debt financing
Preferred Stock
40. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Bootstrapping
Anti-Dilution Protections
seed capital
41. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
Series A Preferred Stock
Post-money
capital under management
42. 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.
syndication
Membership Interest
Post-money
minority enterprise small business investment companies (MESBICS)
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
Common Stock
return on investment (ROI)
Private Equity
Book Value
44. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
going private
mezzanine financing
NDA (Non-disclosure agreement)
45. 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.
Qualified IPO
follow-on
mezzanine financing
turnaround
46. The way you buy stock
PPM
Warrants
General Partner (GP)
IRR
47. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Post-money
Warrants
acquisition
Preferred Stock
48. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Internal Rate of Return
private investment in public equities (PIPE)
angel investors
Pre-money valuation
49. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
turnaround
lead investor
Preferred Stock
50. Term sheet for equity offering
Capitalization Table
Term Sheet
Internal Rate of Return
Market Capitalization