Test your basic knowledge |

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. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






2. Assets are subject to double taxation - Unlimited number of investors






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






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






5. A study of the background and financial reliability of the company - management team and industry.






6. Compound internal rate of return.






7. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






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






9. 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






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






11. 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


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






13. How you get to vote






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






15. 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






16. Selling an interest in your business to an outside party to raise money.






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






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






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






20. Term sheet for equity offering






21. 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.






22. 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






23. 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






24. Letter of intent summarizing the key legal and financial terms






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






26. Issue of shares of a company to the public by the company (directly) for the first time.






27. How much the company is worth before an investment






28. This refers to a synopsis of the key points of a business plan.






29. 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) ...






30. 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






31. 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.






32. 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






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






34. 'I will buy stock at price we negotiate'






35. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






36. 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






37. 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.






38. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






39. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






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






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






42. The total value of the company immediately prior to the latest round of financing






43. 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.






44. No double tax - Limited number of investors






45. 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.






46. 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






47. 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






48. The amount of this available to a management team for venture investments.






49. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






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