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






2. 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.






3. The way you buy stock






4. 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.






5. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






6. 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.






7. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






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






9. 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






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






11. 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






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






13. 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.






14. 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






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






16. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






18. 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






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






20. 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.






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






22. 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






23. 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.






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






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






26. The internal rate of return on an investment.






27. 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






28. 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






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






30. 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.






31. Compound internal rate of return.






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






33. The method by which an investor will realize an investment.






34. 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






35. 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






36. 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.






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






38. 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






39. 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






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






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






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






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






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






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






46. 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






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






48. 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.






49. 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






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