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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. This refers to a synopsis of the key points of a business plan.
buyout
executive summary
bridge loans
PPM
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.
Anti-Dilution Protections
bridge loans
acquisition
private equity
3. 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.
minority enterprise small business investment companies (MESBICS)
corporate venturing
Dividends
Qualified IPO
4. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Limited Partner
Common Equity
Restricted Shares
recapitalization
5. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Due Diligence
Seed Money
Angel Financing
follow-on
6. 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.
buyout
lead investor
Internal Rate of Return
private equity
7. 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.).
benchmarks
Burn Rate
institutional investors
executive summary
8. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
Business Plan
Internal Rate of Return
minority enterprise small business investment companies (MESBICS)
9. Assets are subject to double taxation - Unlimited number of investors
Outstanding Stock
Capitalization Table
C Corporation
venture capital
10. 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 Equity
Outstanding Stock
Pre-Money Valuation
follow-on
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
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12. 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
Limited Partner
Seed Money
Angel Financing
Adjusted Book Value
13. The value at which an asset is carried on a balance sheet (the cost of the item)
syndication
Subordinated Debt
acquisition
Book Value
14. No double tax - Limited number of investors
IPO(initial public offerings)
S Corporation
Warrants
seed capital
15. 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.
follow-on
Preferred Stock
Preferred Stock
bridge loans
16. 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.
return on investment (ROI)
capital under management
exit
Preferred Stock
17. Letter of intent summarizing the key legal and financial terms
Liquidation
Bootstrapping
Term Sheet
Business Plan
18. 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
Preferred Stock
Pre-Money Valuation
Private Equity
Liquidation Preference
19. The residual ownership in a company like a corporation or LLC 51%=control
buyout
Common Stock
Equity
Closing
20. Cannot get other outside investors-No Shop
seed capital
turnaround
No Shop/Confidentiality
debt financing
21. An investment vehicle designed to invest in a diversified group of investment funds.
Corporation (Limited liability and taxation)
Common Stock
due diligence
fund of funds
22. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t
Series A Preferred Stock
NDA (Non-disclosure agreement)
small business investment companies (SBIC)
Private Equity
23. The way you buy stock
PPM
Bridge Financing
series a preferred stock
Liquidation Preference
24. 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 -
limited partnerships
venture capital
Equity
Market Capitalization
25. The internal rate of return on an investment.
management buy-out (MBO)
Dividends
return on investment (ROI)
Common Equity
26. Document between general and limited partnership of each fund spells out details of the partnership.
Pre-Money Valuation
Lead Investor
benchmarks
Limited Partnership Agreement
27. How much the company is worth before an investment
secondary purchase
lock-up period
Pre-Money Valuation
fund of funds
28. 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
Qualified IPO
Post-money
capital gain
seed capital
29. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
venture capital
PPM
Restricted Stock
30. 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.
portfolio compaay
liquidation
Deal Structure
series a preferred stock
31. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
institutional investors
capital gain
equity offerings
secondary purchase
32. Don't talk to the market about the company
venture capital
mezzanine financing
Stock Price Agreement
Confidentiality
33. 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
Angel Financing
acquisition
Preferred Stock
Liquidation Preference
34. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Outstanding Stock
venture capital
Limited Partner
leverage buy-out(LBO)
35. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
going private
Common Equity
mezzanine financing
secondary purchase
36. Term sheet for equity offering
Adjusted Book Value
Market Capitalization
Dividends
Term Sheet
37. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
management buy-out (MBO)
Capital
Limited Partnership Agreement
General Partner (GP)
38. The amount of this available to a management team for venture investments.
bridge loans
Restricted Shares
capital under management
Conversion Rights
39. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Initial Public Offering
Elevator Pitch
due diligence
management buy-in (MBI)
40. The maximum amount of cash that a partner is required to contribute under the terms
Liquidation Preference
Anti-Dilution Protections
Bridge Financing
Capital Commitment
41. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Liquidation Preference
Seed Money
debt financing
capital gain
42. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Pre-money valuation
Anti-Dilution Protections
Adjusted Book Value
General Partner (GP)
43. 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
portfolio compaay
Corporation (Limited liability and taxation)
Adjusted Book Value
series a preferred stock
44. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Deal Structure
Pre-Money Valuation
exit
Preferred Stock
45. 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.
Deal Structure
executive summary
fund of funds
secondary public offering
46. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Business Summary
Capitalization Table
Conversion Rights
Preferred Stock
47. The company or entity into which a fund invests directly.
portfolio compaay
Capital Call 'Drawdown'
Pre-Money Valuation
mezzanine financing
48. 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.
Dividends
Deal Structure
Capital
executive summary
49. How you get out
raising capital
Liquidation Preference
series a preferred stock
Capital
50. The rate of return or profit that an investment is expected to earn.
Preferred Stock
Liquidation Preference
Internal Rate of Return
Book Value