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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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) ...






2. 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.






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






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






5. 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






6. 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






7. This refers to a synopsis of the key points of a business plan.






8. The equity ownership in a corporation. Also has basic voting rights






9. The rate at which a company expends net cash over a certain period - usually a month.






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






11. 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






12. 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.






13. 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.






14. 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.






15. An IPO that has met certain






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






17. Cannot get other outside investors-No Shop






18. 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.).






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






20. 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






21. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






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






23. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






24. 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






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






26. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






27. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






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






29. How you get out






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






31. 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






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






33. 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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34. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






35. This refers to obtaining capital from investors or venture capital sources.






36. The company or entity into which a fund invests directly.






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






38. 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.






39. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






40. 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






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






42. 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.






43. The way you buy stock






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






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






46. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






47. Letter of intent summarizing the key legal and financial terms






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






49. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c






50. 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