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. 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.






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






3. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






4. 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.






5. 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






6. The way you buy stock






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






8. 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.






9. 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


10. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






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






12. Compound internal rate of return.






13. 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.






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






15. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






16. 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






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






18. 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.






19. 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.






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






21. The internal rate of return on an investment.






22. The method by which an investor will realize an investment.






23. 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.






24. How much the company is worth before an investment






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






26. 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






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






28. An IPO that has met certain






29. 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






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






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






32. 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.






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






34. 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






35. 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






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






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






38. How you get to vote






39. 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.






40. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






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






42. 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






43. 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






44. 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






45. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






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






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






48. 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






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






50. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...