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






2. The party that manages a limited partnership and is liable for the debts of the company






3. 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.






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






5. 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.






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






7. 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






8. How you get to vote






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






10. 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.






11. 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






12. 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.






13. 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.






14. 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






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






16. 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.






17. 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


18. 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.).






19. 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






20. The way you buy stock






21. Compound internal rate of return.






22. 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






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






24. 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.






25. 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 -






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






27. How much the company is worth before an investment






28. 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






29. 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.






30. 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.






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






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






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






34. 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






35. 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.






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






37. 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.






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






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






40. 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






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






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






43. No double tax - Limited number of investors






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






45. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






47. An IPO that has met certain






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






49. The internal rate of return on an investment.






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