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. How much the company is worth before an investment






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






3. 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.






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






5. 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.






6. A study of the background and financial reliability of the company - management team and industry.






7. An IPO that has met certain






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






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






10. 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.






11. 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.






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. 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.






14. 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






15. 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






16. Cannot get other outside investors-No Shop






17. Assets are subject to double taxation - Unlimited number of investors






18. 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






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






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






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






22. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






23. How you get to vote






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.






25. 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






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






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






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






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






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






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






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. 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






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






35. 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






36. 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






37. 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






38. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






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






40. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






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






42. 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






43. 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






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






45. Don't talk to the market about the company






46. 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 -






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






48. 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






49. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






50. 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