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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. 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
secondary public offering
equity offerings
private equity
Dividends
2. 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
Post-Money Valuation
minority enterprise small business investment companies (MESBICS)
Business Plan
small business investment companies (SBIC)
3. How you get out
portfolio compaay
Liquidation Preference
Closing
exit
4. A business owned by stockholders who share in its profits but are not personally responsible for its debts
mezzanine financing
Corporation (Limited liability and taxation)
liquidation
venture capital
5. 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
management buy-out (MBO)
Preferred Stock
Deal Structure
Burn Rate
6. 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
Adjusted Book Value
bridge loans
Common Stock
Venture Capitalist
7. 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
Membership Interest
going private
S Corporation
Business Summary
8. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
Liquidation
corporate venturing
Due Diligence
9. 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
Liquidation Preference
Venture Capital Financing
private equity
seed capital
10. Investments by a private equity fund in a publicly traded company - usually at a discount.
Burn Rate
private investment in public equities (PIPE)
Series A Preferred Stock
turnaround
11. 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.
benchmarks
Cash-out election
Pre-money valuation
Preferred Stock
12. 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
Deal Structure
Limited Partnership Agreement
Seed Money
exit
13. The way you buy stock
Preferred Stock
capital under management
No Shop/Confidentiality
PPM
14. 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
Due Diligence
Restricted Stock
Limited Partner
seed capital
15. 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.
Venture Capital Financing
Common Stock
Stock Price Agreement
Post-money
16. 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.
raising capital
Bridge Financing
Liquidation Preference
Burn Rate
17. 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
equity offerings
going private
debt financing
fund of funds
18. 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.
benchmarks
syndication
Capital Commitment
private equity
19. Term sheet for equity offering
follow-on
Term Sheet
leverage buy-out(LBO)
Dividends
20. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
institutional investors
minority enterprise small business investment companies (MESBICS)
Due Diligence
21. Partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment
Post-money
capital gain
Pre-Money Valuation
Limited Partner
22. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -
limited partnerships
Capital Commitment
capital gain
capital under management
23. 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
equity financing
Qualified IPO
management buy-in (MBI)
IPO (Initial Public Offering)
24. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment
25. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
PPM
Corporation (Limited liability and taxation)
Business Summary
closing
26. This refers to a synopsis of the key points of a business plan.
Restricted Shares
capital under management
Closing
executive summary
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
equity offerings
due diligence
term sheet
Elevator Pitch
28. No double tax - Limited number of investors
S Corporation
angel investors
Adjusted Book Value
lock-up period
29. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
secondary purchase
Post-Money Valuation
corporate venturing
30. The total value of the company immediately prior to the latest round of financing
institutional investors
Seed Money
Limited Partner
Pre-money valuation
31. The rate at which a company expends net cash over a certain period - usually a month.
Bootstrapping
Burn Rate
acquisition
executive summary
32. A security with limits on its transferability. Usually issued in connection with a private placement
Series A Preferred Stock
Business Summary
Restricted Stock
closing
33. The company or entity into which a fund invests directly.
syndication
Bootstrapping
executive summary
portfolio compaay
34. The internal rate of return on an investment.
return on investment (ROI)
Deal Structure
Business Plan
raising capital
35. 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
Deal Structure
Lead Investor
Liquidity Event
equity financing
36. 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) ...
Capitalization Table
Post-money
due diligence
Initial Public Offering
37. 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
Preferred Stock
Pre-Money Valuation
Cash-out election
Warrants
38. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
private equity
Preferred Stock
liquidation
39. 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)
small business investment companies (SBIC)
recapitalization
Qualified IPO
40. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
management buy-out (MBO)
Senior Stock
going private
limited partnerships
41. 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.
Outstanding Stock
Warrants
Qualified IPO
Series A Preferred Stock
42. 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
executive summary
Business Plan
Capital Call 'Drawdown'
IPO (Initial Public Offering)
43. The rate of return or profit that an investment is expected to earn.
Corporation (Limited liability and taxation)
Internal Rate of Return
Anti-Dilution Protections
Capital Call 'Drawdown'
44. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Common Stock
Membership Interest
return on investment (ROI)
Preferred Stock
45. 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.).
minority enterprise small business investment companies (MESBICS)
Limited Partner
Liquidation Preference
institutional investors
46. The party that manages a limited partnership and is liable for the debts of the company
closing
Book Value
General Partner (GP)
limited partnerships
47. Date the LP's subscription is effective and they become partner
Closing
Voting Rights
Anti-Dilution Protections
Limited Partner
48. 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
raising capital
fund of funds
Private Equity
Seed Money
49. The value at which an asset is carried on a balance sheet (the cost of the item)
Pre-Money Valuation
Liquidity Event
Book Value
Liquidation Preference
50. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Burn Rate
Dividends
portfolio compaay
capital gain