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. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






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






3. The rate at which a company expends net cash over a certain period - usually a month.






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






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






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






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






8. Date the LP's subscription is effective and they become partner






9. 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






10. How you get to vote






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






12. 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






13. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






14. The maximum amount of cash that a partner is required to contribute under the terms






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






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






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






18. 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






19. 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






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






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






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






23. 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.






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






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






26. 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






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






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






29. 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






30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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 way you buy stock






33. The equity ownership in a corporation. Also has basic voting rights






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. 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.






36. 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.






37. An IPO that has met certain






38. How much the company is worth before an investment






39. No double tax - Limited number of investors






40. 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.






41. 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






42. 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






43. 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.






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






45. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the






46. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






47. 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






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






49. A security with limits on its transferability. Usually issued in connection with a private placement






50. How you get out