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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 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


2. 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






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






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






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






6. 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






7. 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.






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






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. 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






11. How much the company is worth before an investment






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. 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 -






14. The practice of a large company taking a minority equity position in a smaller company in a related field.






15. 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






16. 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






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






18. 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






19. 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






20. 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






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






22. 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






23. 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






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






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






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






27. The internal rate of return on an investment.






28. This refers to obtaining capital from investors or venture capital sources.






29. 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.






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






31. 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.






32. 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






33. 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) ...






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






35. The company or entity into which a fund invests directly.






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






37. Term sheet for equity offering






38. 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






39. 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.).






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






41. 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.






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






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






44. An IPO that has met certain






45. 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






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






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






48. 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






49. 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.






50. 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