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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 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






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






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






4. 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






5. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






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






7. 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






8. Compound internal rate of return.






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






10. 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






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






12. 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






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






15. How you get to vote






16. 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.






17. 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.






18. 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.






19. 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.






20. 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.






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






22. 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.






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. 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






25. 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


26. 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






27. 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






28. 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.






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






30. 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






31. 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






32. 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






33. The value at which an asset is carried on a balance sheet (the cost of the item)






34. 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






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






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






37. 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






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






39. How you get out






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






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






42. 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.).






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






44. 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






45. 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






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






47. 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.






48. 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.






49. The internal rate of return on an investment.






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