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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. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project
No Shop/Confidentiality
Lead Investor
Adjusted Book Value
acquisition
2. 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
series a preferred stock
liquidation
Post-Money Valuation
Stock Price Agreement
3. 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
Corporation (Limited liability and taxation)
bridge loans
Venture Capital Financing
Restricted Shares
4. 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
small business investment companies (SBIC)
Business Summary
Bridge Financing
Burn Rate
5. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.
going private
equity financing
Anti-Dilution Protections
syndication
6. This refers to a synopsis of the key points of a business plan.
C Corporation
small business investment companies (SBIC)
executive summary
Bootstrapping
7. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
executive summary
corporate venturing
seed capital
8. 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.
Capitalization Table
term sheet
Qualified IPO
Equity
9. 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.
minority enterprise small business investment companies (MESBICS)
Liquidation
Adjusted Book Value
Bootstrapping
10. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
seed capital
Warrants
term sheet
Capital Call 'Drawdown'
11. This refers to obtaining capital from investors or venture capital sources.
Angel Financing
IPO(initial public offerings)
return on investment (ROI)
raising capital
12. 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
Liquidity Event
Cash-out election
corporate venturing
Subordinated Debt
13. 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.
Liquidation Preference
capital gain
mezzanine financing
Lead Investor
14. 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.
angel investors
secondary purchase
liquidation
follow-on
15. The total value of the company immediately prior to the latest round of financing
Corporation (Limited liability and taxation)
capital under management
going private
Pre-money valuation
16. 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.
closing
No Shop/Confidentiality
IPO (Initial Public Offering)
turnaround
17. The party that manages a limited partnership and is liable for the debts of the company
Closing
mezzanine financing
General Partner (GP)
Liquidation Preference
18. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Conversion Rights
secondary purchase
Outstanding Stock
Private Equity
19. The maximum amount of cash that a partner is required to contribute under the terms
Liquidity Event
PPM
Capital Commitment
institutional investors
20. A security with limits on its transferability. Usually issued in connection with a private placement
Closing
liquidation
Restricted Stock
Venture Capitalist
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
Market Capitalization
acquisition
Closing
Term Sheet
22. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Book Value
Liquidity Event
Pre-Money Valuation
equity offerings
23. Pre-money valuation plus the amount invested in the latest round
Post-money
limited partnerships
return on investment (ROI)
corporate venturing
24. Cannot get other outside investors-No Shop
series a preferred stock
acquisition
No Shop/Confidentiality
Preferred Stock
25. 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.
going private
Business Plan
No Shop/Confidentiality
management buy-out (MBO)
26. The company or entity into which a fund invests directly.
Pre-Money Valuation
Preferred Stock
portfolio compaay
due diligence
27. 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
Corporation (Limited liability and taxation)
Venture Capitalist
going private
28. The rate of return or profit that an investment is expected to earn.
capital under management
Capital Call 'Drawdown'
Internal Rate of Return
equity financing
29. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Warrants
S Corporation
Anti-Dilution Protections
capital under management
30. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Outstanding Stock
venture capital
Term Sheet
31. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l
bridge loans
Liquidation
exit
corporate venturing
32. 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
Elevator Pitch
Initial Public Offering
Capital Call 'Drawdown'
Confidentiality
33. A study of the background and financial reliability of the company - management team and industry.
Cash-out election
Series A Preferred Stock
closing
Due Diligence
34. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Initial Public Offering
Capitalization Table
capital under management
35. The amount of this available to a management team for venture investments.
institutional investors
seed capital
capital under management
recapitalization
36. 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.
IPO(initial public offerings)
Common Stock
lock-up period
Liquidity Event
37. 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.
recapitalization
Elevator Pitch
Post-money
lead investor
38. 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 -
Internal Rate of Return
limited partnerships
C Corporation
Elevator Pitch
39. 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
S Corporation
venture capital
Market Capitalization
management buy-out (MBO)
40. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Venture Capitalist
Angel Financing
Conversion Rights
capital gain
41. Assets are subject to double taxation - Unlimited number of investors
Preferred Stock
C Corporation
IPO(initial public offerings)
Internal Rate of Return
42. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Senior Stock
Series A Preferred Stock
Liquidation Preference
43. 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
Subordinated Debt
Business Plan
debt financing
private equity
44. 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
corporate venturing
Liquidity Event
Bootstrapping
45. The practice of a large company taking a minority equity position in a smaller company in a related field.
acquisition
Limited Partnership Agreement
corporate venturing
equity offerings
46. The residual ownership in a company like a corporation or LLC 51%=control
C Corporation
Lead Investor
Equity
Membership Interest
47. The equity ownership in a corporation. Also has basic voting rights
IRR
Capital
due diligence
Common Stock
48. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Voting Rights
Due Diligence
buyout
management buy-in (MBI)
49. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Venture Capital Financing
term sheet
Corporation (Limited liability and taxation)
Term Sheet
50. 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
raising capital
closing
PPM
Liquidation Preference