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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
Adjusted Book Value
Capitalization Table
Membership Interest
lock-up period
2. Issue of shares of a company to the public by the company (directly) for the first time.
buyout
Capital Commitment
PPM
IPO(initial public offerings)
3. The amount of this available to a management team for venture investments.
Warrants
PPM
acquisition
capital under management
4. 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
Qualified IPO
raising capital
Liquidity Event
Venture Capitalist
5. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
term sheet
Business Summary
recapitalization
Confidentiality
6. The equity ownership in a corporation. Also has basic voting rights
Capitalization Table
mezzanine financing
Series A Preferred Stock
Common Stock
7. 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
private equity
Preferred Stock
turnaround
seed capital
8. Compound internal rate of return.
Restricted Shares
limited partnerships
Burn Rate
IRR
9. An investment vehicle designed to invest in a diversified group of investment funds.
Business Plan
fund of funds
NDA (Non-disclosure agreement)
Dividends
10. 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
Capitalization Table
angel investors
Series A Preferred Stock
venture capital
11. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
limited partnerships
Pre-Money Valuation
Common Stock
12. 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
management buy-in (MBI)
Limited Partner
Seed Money
Deal Structure
13. 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.
Elevator Pitch
follow-on
Capitalization Table
Burn Rate
14. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Seed Money
Equity
Term Sheet
Subordinated Debt
15. How you get to vote
Post-Money Valuation
Restricted Shares
Voting Rights
portfolio compaay
16. 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.
private investment in public equities (PIPE)
Liquidation
Liquidation Preference
Bootstrapping
17. 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.
Due Diligence
Senior Stock
lead investor
lock-up period
18. 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.
executive summary
Liquidation
C Corporation
Preferred Stock
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.
seed capital
Venture Capital Financing
No Shop/Confidentiality
syndication
20. 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.
Elevator Pitch
minority enterprise small business investment companies (MESBICS)
Term Sheet
portfolio compaay
21. 'I will buy stock at price we negotiate'
Capital Call 'Drawdown'
Stock Price Agreement
Adjusted Book Value
Initial Public Offering
22. 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.
Internal Rate of Return
turnaround
Private Equity
Warrants
23. 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.
Venture Capitalist
Bootstrapping
secondary public offering
IRR
24. 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
management buy-out (MBO)
exit route
management buy-in (MBI)
25. 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
26. 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
IPO (Initial Public Offering)
capital under management
venture capital
Venture Capitalist
27. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet
Liquidation Preference
term sheet
Cash-out election
buyout
28. 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.
recapitalization
Term Sheet
Subordinated Debt
Capital Commitment
29. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
going private
capital gain
benchmarks
Limited Partner
30. 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
IRR
IPO (Initial Public Offering)
Voting Rights
benchmarks
31. 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
Limited Partner
Lead Investor
Private Equity
Warrants
32. 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
private equity
Adjusted Book Value
follow-on
33. The value at which an asset is carried on a balance sheet (the cost of the item)
Liquidation
Book Value
Capital Call 'Drawdown'
Warrants
34. 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
equity offerings
IPO(initial public offerings)
due diligence
35. The rate of return or profit that an investment is expected to earn.
Private Equity
Internal Rate of Return
No Shop/Confidentiality
capital under management
36. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Private Equity
Membership Interest
term sheet
Common Equity
37. 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
Market Capitalization
Common Stock
acquisition
venture capital
38. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Anti-Dilution Protections
Preferred Stock
syndication
closing
39. How you get out
Liquidation Preference
Venture Capitalist
Capital Commitment
exit route
40. A security with limits on its transferability. Usually issued in connection with a private placement
IRR
Restricted Stock
syndication
Seed Money
41. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Voting Rights
Deal Structure
Preferred Stock
42. 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.).
institutional investors
capital gain
Conversion Rights
Capital
43. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
series a preferred stock
Liquidation
benchmarks
recapitalization
44. 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
series a preferred stock
lock-up period
capital under management
Anti-Dilution Protections
45. 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
leverage buy-out(LBO)
closing
Preferred Stock
Equity
46. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Stock Price Agreement
Anti-Dilution Protections
leverage buy-out(LBO)
corporate venturing
47. 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.
Pre-money valuation
Angel Financing
Membership Interest
Bridge Financing
48. 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.
bridge loans
Outstanding Stock
Elevator Pitch
Venture Capital Financing
49. The internal rate of return on an investment.
Corporation (Limited liability and taxation)
return on investment (ROI)
fund of funds
exit
50. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
liquidation
Confidentiality
capital under management
Senior Stock