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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. Don't talk to the market about the company
Seed Money
Confidentiality
Adjusted Book Value
follow-on
2. The total value of the company immediately prior to the latest round of financing
venture capital
Common Equity
S Corporation
Pre-money valuation
3. This refers to obtaining capital from investors or venture capital sources.
executive summary
Anti-Dilution Protections
raising capital
Liquidation Preference
4. 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
Liquidation Preference
Bridge Financing
Capitalization Table
liquidation
5. 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
lock-up period
Capital Commitment
term sheet
Private Equity
6. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in
Business Plan
Anti-Dilution Protections
Common Stock
Deal Structure
7. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Preferred Stock
Capital Call 'Drawdown'
Capital
Elevator Pitch
8. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Cash-out election
Venture Capital Financing
private investment in public equities (PIPE)
Senior Stock
9. Date the LP's subscription is effective and they become partner
bridge loans
equity financing
Closing
Deal Structure
10. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
IPO (Initial Public Offering)
equity offerings
capital gain
minority enterprise small business investment companies (MESBICS)
11. How you get to vote
portfolio compaay
Preferred Stock
Business Summary
Voting Rights
12. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.
syndication
Corporation (Limited liability and taxation)
liquidation
Capital Call 'Drawdown'
13. 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.
Market Capitalization
minority enterprise small business investment companies (MESBICS)
exit route
venture capital
14. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Liquidation Preference
IPO(initial public offerings)
raising capital
Conversion Rights
15. 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
benchmarks
secondary purchase
bridge loans
Conversion Rights
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.
Bootstrapping
Voting Rights
Liquidation Preference
Liquidity Event
17. 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.
small business investment companies (SBIC)
Capitalization Table
Outstanding Stock
Restricted Shares
18. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Book Value
limited partnerships
buyout
Warrants
19. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c
return on investment (ROI)
Series A Preferred Stock
Pre-Money Valuation
Anti-Dilution Protections
20. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
exit route
Term Sheet
acquisition
due diligence
21. 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
small business investment companies (SBIC)
Pre-money valuation
Liquidity Event
debt financing
22. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
S Corporation
buyout
NDA (Non-disclosure agreement)
Post-Money Valuation
23. 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
seed capital
Initial Public Offering
Term Sheet
minority enterprise small business investment companies (MESBICS)
24. 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.
lead investor
Angel Financing
secondary purchase
recapitalization
25. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Bootstrapping
leverage buy-out(LBO)
Voting Rights
secondary purchase
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
term sheet
series a preferred stock
due diligence
venture capital
27. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
going private
buyout
Pre-Money Valuation
Capitalization Table
28. 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.
return on investment (ROI)
Deal Structure
minority enterprise small business investment companies (MESBICS)
secondary purchase
29. 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
buyout
return on investment (ROI)
Adjusted Book Value
Market Capitalization
30. A security with limits on its transferability. Usually issued in connection with a private placement
return on investment (ROI)
Restricted Stock
Stock Price Agreement
IPO (Initial Public Offering)
31. 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
Due Diligence
series a preferred stock
lead investor
IRR
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
debt financing
private equity
Venture Capital Financing
Seed Money
33. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
management buy-in (MBI)
lock-up period
buyout
34. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Corporation (Limited liability and taxation)
Restricted Stock
Common Stock
35. 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
Business Plan
Liquidation Preference
management buy-in (MBI)
acquisition
36. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Restricted Shares
Liquidation
Qualified IPO
Business Plan
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.
corporate venturing
NDA (Non-disclosure agreement)
lock-up period
turnaround
38. The amount of this available to a management team for venture investments.
capital under management
portfolio compaay
fund of funds
Bridge Financing
39. Selling an interest in your business to an outside party to raise money.
institutional investors
Subordinated Debt
Book Value
equity financing
40. Assets are subject to double taxation - Unlimited number of investors
portfolio compaay
Senior Stock
Seed Money
C Corporation
41. 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
Restricted Stock
Lead Investor
Limited Partner
series a preferred stock
42. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
Pre-money valuation
Term Sheet
Liquidation Preference
43. 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
fund of funds
Venture Capital Financing
capital gain
Post-Money Valuation
44. 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
Capitalization Table
closing
Venture Capitalist
Liquidity Event
45. 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.).
institutional investors
capital gain
Liquidity Event
going private
46. 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
Common Equity
going private
Bridge Financing
term sheet
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.
closing
Dividends
turnaround
Bridge Financing
48. 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.
Bridge Financing
Pre-money valuation
debt financing
term sheet
49. 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.
Initial Public Offering
bridge loans
Preferred Stock
follow-on
50. The company or entity into which a fund invests directly.
Pre-Money Valuation
Common Stock
portfolio compaay
Bootstrapping