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. 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






2. 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

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183


3. 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.






4. A security with limits on its transferability. Usually issued in connection with a private placement






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






6. 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






7. The internal rate of return on an investment.






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






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






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






11. 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






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






13. The method by which an investor will realize an investment.






14. 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.






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






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






17. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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






19. Term sheet for equity offering






20. 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 -






21. How you get out






22. 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






23. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






24. The party that manages a limited partnership and is liable for the debts of the company






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






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






27. 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






28. 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






29. 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.






30. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s






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






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.






33. 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






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






35. 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.






36. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






37. 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






38. 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






39. Cannot get other outside investors-No Shop






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






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






42. 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.






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






44. 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.






45. 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






46. 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






47. 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






48. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






49. 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.






50. Compound internal rate of return.