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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. 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.
minority enterprise small business investment companies (MESBICS)
Preferred Stock
Preferred Stock
debt financing
2. 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.
Deal Structure
Membership Interest
Post-money
Term Sheet
3. 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
Seed Money
closing
IPO (Initial Public Offering)
Bridge Financing
4. Document between general and limited partnership of each fund spells out details of the partnership.
institutional investors
Limited Partnership Agreement
NDA (Non-disclosure agreement)
leverage buy-out(LBO)
5. 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
liquidation
management buy-in (MBI)
Liquidation Preference
recapitalization
6. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
equity financing
fund of funds
Business Summary
Preferred Stock
7. 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) ...
seed capital
Initial Public Offering
equity offerings
Seed Money
8. 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
Closing
private equity
fund of funds
Conversion Rights
9. 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
debt financing
Deal Structure
raising capital
Voting Rights
10. Don't talk to the market about the company
Pre-Money Valuation
portfolio compaay
Confidentiality
Conversion Rights
11. 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
small business investment companies (SBIC)
management buy-in (MBI)
Common Stock
Business Summary
12. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
syndication
executive summary
Liquidation Preference
Anti-Dilution Protections
13. The residual ownership in a company like a corporation or LLC 51%=control
Dividends
Equity
acquisition
fund of funds
14. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
series a preferred stock
Private Equity
equity offerings
capital gain
15. 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
Equity
Series A Preferred Stock
going private
Preferred Stock
16. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Restricted Stock
Limited Partnership Agreement
Subordinated Debt
PPM
17. The equity ownership in a corporation. Also has basic voting rights
Liquidation Preference
Preferred Stock
Common Stock
Capital Commitment
18. 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
Restricted Shares
Stock Price Agreement
fund of funds
IPO(initial public offerings)
19. 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.
Liquidation Preference
private equity
syndication
Bridge Financing
20. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
small business investment companies (SBIC)
Post-money
Liquidation
21. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
return on investment (ROI)
Conversion Rights
Venture Capitalist
capital gain
22. The practice of a large company taking a minority equity position in a smaller company in a related field.
Venture Capitalist
capital gain
corporate venturing
minority enterprise small business investment companies (MESBICS)
23. 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.
Subordinated Debt
lock-up period
liquidation
Conversion Rights
24. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
secondary purchase
mezzanine financing
capital under management
25. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
going private
management buy-in (MBI)
Venture Capital Financing
Preferred Stock
26. 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
Lead Investor
Closing
Preferred Stock
private equity
27. 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
Qualified IPO
bridge loans
Elevator Pitch
Venture Capital Financing
28. 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
going private
acquisition
seed capital
Bootstrapping
29. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
equity offerings
Qualified IPO
going private
exit
30. The total value of the company immediately prior to the latest round of financing
Venture Capitalist
secondary purchase
S Corporation
Pre-money valuation
31. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot
due diligence
Venture Capitalist
IPO(initial public offerings)
Voting Rights
32. This refers to a synopsis of the key points of a business plan.
Pre-Money Valuation
Confidentiality
follow-on
executive summary
33. 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.
Limited Partnership Agreement
follow-on
lead investor
Market Capitalization
34. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Venture Capitalist
Preferred Stock
due diligence
35. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Series A Preferred Stock
Common Stock
Liquidation
36. 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
Initial Public Offering
recapitalization
Bridge Financing
small business investment companies (SBIC)
37. 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
mezzanine financing
due diligence
Lead Investor
General Partner (GP)
38. A study of the background and financial reliability of the company - management team and industry.
closing
debt financing
Due Diligence
IPO(initial public offerings)
39. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
private equity
Term Sheet
due diligence
angel investors
40. 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
Cash-out election
IRR
Angel Financing
Post-Money Valuation
41. 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.
Equity
Restricted Stock
Capital
management buy-out (MBO)
42. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Confidentiality
Book Value
Conversion Rights
43. How you get out
Liquidation Preference
IPO(initial public offerings)
capital gain
seed capital
44. The company or entity into which a fund invests directly.
Liquidation
Preferred Stock
Venture Capitalist
portfolio compaay
45. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Pre-money valuation
Dividends
NDA (Non-disclosure agreement)
buyout
46. 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
Cash-out election
Internal Rate of Return
C Corporation
47. Term sheet for equity offering
Pre-money valuation
Dividends
Term Sheet
due diligence
48. 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
Outstanding Stock
Preferred Stock
Business Plan
Confidentiality
49. 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.).
IPO(initial public offerings)
institutional investors
IRR
General Partner (GP)
50. The method by which an investor will realize an investment.
Warrants
exit route
buyout
small business investment companies (SBIC)