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. 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






2. How much the company is worth before an investment






3. 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






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






5. 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






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






7. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






8. The residual ownership in a company like a corporation or LLC 51%=control






9. 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.






10. 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.






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






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






13. 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






14. 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






15. 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






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






17. 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






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






19. The internal rate of return on an investment.






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






21. 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






22. 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.






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






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






25. 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






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






27. 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.).






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






29. 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.






30. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






31. Compound internal rate of return.






32. A study of the background and financial reliability of the company - management team and industry.






33. How you get out






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






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






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






37. 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.






38. 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.






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






40. 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






41. 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) ...






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






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






44. 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.






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






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






47. No double tax - Limited number of investors






48. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






49. 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






50. 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.