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






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






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






4. 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.






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






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






7. 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






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






9. 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






10. 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






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






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






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






14. 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






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






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






17. A business owned by stockholders who share in its profits but are not personally responsible for its debts






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






19. 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.






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






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






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






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






24. 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.






25. Investments by a private equity fund in a publicly traded company - usually at a discount.






26. 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






27. 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.






28. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






29. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






30. 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.






31. 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.






32. How you get to vote






33. The way you buy stock






34. 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






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






36. 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.






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






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






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






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






41. 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.






42. 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






43. 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






44. 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.






45. Cannot get other outside investors-No Shop






46. 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






47. 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






48. 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 -






49. 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






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