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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. 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.
Confidentiality
Venture Capital Financing
lock-up period
exit route
2. 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.
small business investment companies (SBIC)
Book Value
Pre-money valuation
acquisition
3. 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.
lead investor
Pre-Money Valuation
capital under management
Common Stock
4. The amount of this available to a management team for venture investments.
capital under management
Pre-Money Valuation
private investment in public equities (PIPE)
Corporation (Limited liability and taxation)
5. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
mezzanine financing
Qualified IPO
private equity
Senior Stock
6. Selling an interest in your business to an outside party to raise money.
exit route
executive summary
equity financing
Subordinated Debt
7. 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
leverage buy-out(LBO)
Warrants
Due Diligence
benchmarks
8. 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
private equity
term sheet
Lead Investor
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
going private
fund of funds
Liquidation Preference
debt financing
10. 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
equity offerings
Dividends
venture capital
small business investment companies (SBIC)
11. The maximum amount of cash that a partner is required to contribute under the terms
Restricted Shares
Lead Investor
IPO (Initial Public Offering)
Capital Commitment
12. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Limited Partnership Agreement
liquidation
PPM
13. Document between general and limited partnership of each fund spells out details of the partnership.
Voting Rights
Limited Partnership Agreement
Adjusted Book Value
Subordinated Debt
14. 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
secondary purchase
Membership Interest
Business Plan
buyout
15. How much the company is worth before an investment
Pre-Money Valuation
venture capital
Qualified IPO
Due Diligence
16. 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
acquisition
Equity
private equity
Initial Public Offering
17. 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
18. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Capital Call 'Drawdown'
capital gain
Liquidity Event
private equity
19. An investment vehicle designed to invest in a diversified group of investment funds.
recapitalization
General Partner (GP)
fund of funds
Elevator Pitch
20. 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
executive summary
raising capital
Dividends
Seed Money
21. A study of the background and financial reliability of the company - management team and industry.
buyout
leverage buy-out(LBO)
private equity
Due Diligence
22. 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
Equity
Preferred Stock
Conversion Rights
Angel Financing
23. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Angel Financing
secondary purchase
institutional investors
Elevator Pitch
24. 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.).
Liquidation
equity offerings
exit
institutional investors
25. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
Liquidity Event
seed capital
Venture Capitalist
26. The method by which an investor will realize an investment.
mezzanine financing
Capital Call 'Drawdown'
Bootstrapping
exit route
27. An IPO that has met certain
corporate venturing
Common Equity
Liquidity Event
Qualified IPO
28. Compound internal rate of return.
leverage buy-out(LBO)
IRR
equity financing
institutional investors
29. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Angel Financing
angel investors
Closing
liquidation
30. 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
Limited Partner
return on investment (ROI)
Equity
31. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Seed Money
buyout
Deal Structure
acquisition
32. 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
syndication
acquisition
General Partner (GP)
33. 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.
Liquidation
due diligence
Liquidity Event
Outstanding Stock
34. A business owned by stockholders who share in its profits but are not personally responsible for its debts
management buy-in (MBI)
Corporation (Limited liability and taxation)
secondary public offering
Book Value
35. 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
Post-money
small business investment companies (SBIC)
Pre-Money Valuation
Elevator Pitch
36. 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
Pre-Money Valuation
Term Sheet
due diligence
Confidentiality
37. No double tax - Limited number of investors
syndication
Term Sheet
S Corporation
Equity
38. Letter of intent summarizing the key legal and financial terms
buyout
General Partner (GP)
Private Equity
Term Sheet
39. 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
S Corporation
IPO(initial public offerings)
Preferred Stock
due diligence
40. 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.
Liquidation
turnaround
Series A Preferred Stock
secondary purchase
41. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Cash-out election
lead investor
Due Diligence
42. 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 Preference
Cash-out election
buyout
Post-Money Valuation
43. The internal rate of return on an investment.
series a preferred stock
benchmarks
institutional investors
return on investment (ROI)
44. 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
follow-on
leverage buy-out(LBO)
IRR
IPO (Initial Public Offering)
45. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Common Stock
Deal Structure
leverage buy-out(LBO)
Bridge Financing
46. The party that manages a limited partnership and is liable for the debts of the company
benchmarks
General Partner (GP)
bridge loans
Business Plan
47. The way you buy stock
PPM
Liquidation Preference
small business investment companies (SBIC)
lock-up period
48. 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.
Equity
Term Sheet
mezzanine financing
portfolio compaay
49. 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
Series A Preferred Stock
angel investors
Venture Capital Financing
Cash-out election
50. 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.
Bootstrapping
executive summary
Market Capitalization
small business investment companies (SBIC)