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






2. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






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






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






5. 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






6. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






7. 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






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






9. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






10. No double tax - Limited number of investors






11. The internal rate of return on an investment.






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






13. Cannot get other outside investors-No Shop






14. 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.






15. 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.






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






17. 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






18. 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






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






20. 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






21. 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) ...






22. 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






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






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






25. 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.






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






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






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






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






30. How you get to vote






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. 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






33. 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






34. Term sheet for equity offering






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






36. Document between general and limited partnership of each fund spells out details of the partnership.






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






38. 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.






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.






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






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






42. 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.






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






44. 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






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






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






47. 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






48. 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.






49. 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.






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