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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. The internal rate of return on an investment.
Liquidation
Book Value
term sheet
return on investment (ROI)
2. Term sheet for equity offering
Term Sheet
Liquidation Preference
liquidation
Initial Public Offering
3. 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
Capitalization Table
private equity
seed capital
Internal Rate of Return
4. How you get out
Elevator Pitch
Liquidation Preference
Warrants
acquisition
5. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in
Common Stock
Limited Partnership Agreement
Closing
Senior Stock
6. 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
Limited Partnership Agreement
Private Equity
liquidation
Business Plan
7. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
executive summary
IPO (Initial Public Offering)
Warrants
limited partnerships
8. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.
small business investment companies (SBIC)
lock-up period
Market Capitalization
going private
9. 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
fund of funds
Seed Money
Liquidity Event
exit
10. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Common Stock
S Corporation
Deal Structure
11. 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.
Bridge Financing
seed capital
Capitalization Table
exit route
12. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Pre-Money Valuation
Restricted Stock
capital under management
13. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Term Sheet
Pre-money valuation
Adjusted Book Value
Limited Partnership Agreement
14. 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
Common Stock
management buy-in (MBI)
Pre-Money Valuation
capital under management
15. The maximum amount of cash that a partner is required to contribute under the terms
series a preferred stock
Due Diligence
Adjusted Book Value
Capital Commitment
16. 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.
management buy-out (MBO)
Corporation (Limited liability and taxation)
Restricted Stock
acquisition
17. 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
Cash-out election
Equity
Subordinated Debt
S Corporation
18. 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
Angel Financing
Post-Money Valuation
Private Equity
19. 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
Anti-Dilution Protections
Liquidity Event
Post-money
20. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Capitalization Table
Preferred Stock
Liquidity Event
IPO(initial public offerings)
21. 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
Preferred Stock
Market Capitalization
Closing
series a preferred stock
22. 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 under management
benchmarks
Senior Stock
23. 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.
mezzanine financing
portfolio compaay
Qualified IPO
limited partnerships
24. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.
management buy-out (MBO)
going private
secondary public offering
Pre-Money Valuation
25. 'I will buy stock at price we negotiate'
Stock Price Agreement
Adjusted Book Value
recapitalization
small business investment companies (SBIC)
26. Letter of intent summarizing the key legal and financial terms
Common Stock
series a preferred stock
Term Sheet
Membership Interest
27. How much the company is worth before an investment
Elevator Pitch
Pre-Money Valuation
venture capital
Initial Public Offering
28. An IPO that has met certain
Preferred Stock
Private Equity
Liquidation
Qualified IPO
29. This refers to obtaining capital from investors or venture capital sources.
buyout
minority enterprise small business investment companies (MESBICS)
raising capital
small business investment companies (SBIC)
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
angel investors
Capital
Liquidity Event
fund of funds
31. 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
Capitalization Table
Preferred Stock
IPO (Initial Public Offering)
fund of funds
32. Assets are subject to double taxation - Unlimited number of investors
Private Equity
C Corporation
Liquidity Event
acquisition
33. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
syndication
going private
Senior Stock
NDA (Non-disclosure agreement)
34. 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.
Angel Financing
Adjusted Book Value
Book Value
minority enterprise small business investment companies (MESBICS)
35. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
small business investment companies (SBIC)
turnaround
S Corporation
Conversion Rights
36. Selling an interest in your business to an outside party to raise money.
executive summary
equity financing
Business Plan
Post-money
37. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
Subordinated Debt
Series A Preferred Stock
turnaround
38. The equity ownership in a corporation. Also has basic voting rights
Common Stock
IPO (Initial Public Offering)
management buy-out (MBO)
Post-money
39. Pre-money valuation plus the amount invested in the latest round
Closing
Liquidation Preference
Post-money
return on investment (ROI)
40. 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
Capitalization Table
Business Plan
Preferred Stock
Post-money
41. The company or entity into which a fund invests directly.
Liquidation
portfolio compaay
Stock Price Agreement
term sheet
42. 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.
Warrants
Bootstrapping
Term Sheet
executive summary
43. Document between general and limited partnership of each fund spells out details of the partnership.
fund of funds
Limited Partnership Agreement
Confidentiality
capital gain
44. The way you buy stock
PPM
Internal Rate of Return
private equity
term sheet
45. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Preferred Stock
Membership Interest
Warrants
Common Equity
46. The practice of a large company taking a minority equity position in a smaller company in a related field.
No Shop/Confidentiality
corporate venturing
Liquidation Preference
lock-up period
47. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Common Equity
Outstanding Stock
Subordinated Debt
Stock Price Agreement
48. 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.
PPM
IRR
minority enterprise small business investment companies (MESBICS)
liquidation
49. Date the LP's subscription is effective and they become partner
Closing
Elevator Pitch
syndication
General Partner (GP)
50. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
S Corporation
benchmarks
due diligence