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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. 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
PPM
Series A Preferred Stock
closing
Capitalization Table
2. How you get out
Capital Call 'Drawdown'
private equity
lock-up period
Liquidation Preference
3. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project
buyout
institutional investors
Lead Investor
Pre-Money Valuation
4. 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.
capital under management
C Corporation
term sheet
leverage buy-out(LBO)
5. An investment vehicle designed to invest in a diversified group of investment funds.
capital gain
capital under management
Capital Call 'Drawdown'
fund of funds
6. 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
follow-on
Voting Rights
Burn Rate
7. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
secondary purchase
Limited Partner
Preferred Stock
exit
8. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Limited Partnership Agreement
syndication
Liquidity Event
Membership Interest
9. 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
Series A Preferred Stock
Seed Money
buyout
going private
10. How much the company is worth before an investment
syndication
Anti-Dilution Protections
Pre-Money Valuation
Capitalization Table
11. 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.
Bridge Financing
IRR
equity financing
Venture Capital Financing
12. The party that manages a limited partnership and is liable for the debts of the company
Corporation (Limited liability and taxation)
PPM
General Partner (GP)
Business Summary
13. 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
capital under management
Common Stock
Corporation (Limited liability and taxation)
private investment in public equities (PIPE)
14. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
S Corporation
portfolio compaay
benchmarks
15. 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.
portfolio compaay
Private Equity
lead investor
IPO(initial public offerings)
16. 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
term sheet
debt financing
exit
17. 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
mezzanine financing
Restricted Shares
lock-up period
Anti-Dilution Protections
18. 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.
liquidation
acquisition
seed capital
Bridge Financing
19. 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
portfolio compaay
Preferred Stock
series a preferred stock
Corporation (Limited liability and taxation)
20. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
bridge loans
Liquidation
Preferred Stock
Qualified IPO
21. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Capital Call 'Drawdown'
mezzanine financing
buyout
Corporation (Limited liability and taxation)
22. 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
Dividends
secondary purchase
venture capital
Term Sheet
23. 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
Business Plan
Confidentiality
seed capital
Pre-Money Valuation
24. A business owned by stockholders who share in its profits but are not personally responsible for its debts
exit route
turnaround
Corporation (Limited liability and taxation)
Liquidation Preference
25. The internal rate of return on an investment.
minority enterprise small business investment companies (MESBICS)
mezzanine financing
return on investment (ROI)
Venture Capital Financing
26. Cannot get other outside investors-No Shop
private investment in public equities (PIPE)
term sheet
No Shop/Confidentiality
Term Sheet
27. No double tax - Limited number of investors
management buy-out (MBO)
Internal Rate of Return
S Corporation
bridge loans
28. 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) ...
exit
Initial Public Offering
Common Equity
private equity
29. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
Preferred Stock
Term Sheet
Common Equity
30. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
exit route
NDA (Non-disclosure agreement)
portfolio compaay
executive summary
31. Term sheet for equity offering
Term Sheet
Pre-money valuation
Bootstrapping
Adjusted Book Value
32. 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
Limited Partner
Preferred Stock
recapitalization
Market Capitalization
33. The practice of a large company taking a minority equity position in a smaller company in a related field.
Common Equity
Adjusted Book Value
corporate venturing
Post-money
34. 'I will buy stock at price we negotiate'
Liquidation
angel investors
Stock Price Agreement
Equity
35. This refers to a synopsis of the key points of a business plan.
Elevator Pitch
executive summary
Post-Money Valuation
Restricted Stock
36. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
benchmarks
Warrants
Book Value
Common Stock
37. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Qualified IPO
No Shop/Confidentiality
Capital
Bootstrapping
38. 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
Warrants
debt financing
Business Plan
leverage buy-out(LBO)
39. 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.
private equity
term sheet
Pre-Money Valuation
follow-on
40. 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
IPO(initial public offerings)
General Partner (GP)
Subordinated Debt
private equity
41. The rate of return or profit that an investment is expected to earn.
Conversion Rights
Qualified IPO
going private
Internal Rate of Return
42. 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
Stock Price Agreement
Pre-Money Valuation
Preferred Stock
Bridge Financing
43. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
syndication
No Shop/Confidentiality
Angel Financing
44. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
return on investment (ROI)
small business investment companies (SBIC)
portfolio compaay
45. 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
Closing
bridge loans
seed capital
Warrants
46. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the
Preferred Stock
syndication
going private
General Partner (GP)
47. 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
benchmarks
Common Stock
Venture Capitalist
fund of funds
48. Don't talk to the market about the company
Anti-Dilution Protections
Confidentiality
No Shop/Confidentiality
Capital
49. The way you buy stock
capital gain
equity financing
Adjusted Book Value
PPM
50. 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.
mezzanine financing
capital gain
No Shop/Confidentiality
Private Equity