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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. How you get out
Business Plan
Liquidation Preference
lock-up period
Outstanding Stock
2. 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.
follow-on
due diligence
institutional investors
Elevator Pitch
3. 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
capital under management
Post-money
Market Capitalization
term sheet
4. Investments by a private equity fund in a publicly traded company - usually at a discount.
secondary public offering
S Corporation
private investment in public equities (PIPE)
buyout
5. 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
raising capital
Burn Rate
Cash-out election
6. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Membership Interest
corporate venturing
Subordinated Debt
private equity
7. 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
Elevator Pitch
Private Equity
Limited Partner
Senior 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.
Pre-money valuation
executive summary
Bootstrapping
management buy-in (MBI)
9. Issue of shares of a company to the public by the company (directly) for the first time.
series a preferred stock
IPO(initial public offerings)
Restricted Stock
minority enterprise small business investment companies (MESBICS)
10. 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
capital under management
fund of funds
Venture Capitalist
Cash-out election
11. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Anti-Dilution Protections
Business Summary
Limited Partnership Agreement
12. 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.
liquidation
Term Sheet
NDA (Non-disclosure agreement)
Outstanding Stock
13. This refers to obtaining capital from investors or venture capital sources.
Adjusted Book Value
Deal Structure
Common Stock
raising capital
14. The way you buy stock
Private Equity
Limited Partnership Agreement
small business investment companies (SBIC)
PPM
15. 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) ...
Elevator Pitch
Membership Interest
management buy-in (MBI)
Initial Public Offering
16. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
Conversion Rights
Preferred Stock
Internal Rate of Return
17. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Capital Commitment
Internal Rate of Return
debt financing
leverage buy-out(LBO)
18. The party that manages a limited partnership and is liable for the debts of the company
Seed Money
General Partner (GP)
Capital
term sheet
19. The internal rate of return on an investment.
return on investment (ROI)
syndication
Business Summary
Book Value
20. 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
series a preferred stock
Liquidation Preference
S Corporation
small business investment companies (SBIC)
21. 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
equity financing
Capital
Pre-Money Valuation
Liquidation Preference
22. 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.
equity financing
secondary public offering
buyout
Capitalization Table
23. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
IPO(initial public offerings)
Post-money
Capital
Venture Capital Financing
24. Letter of intent summarizing the key legal and financial terms
fund of funds
recapitalization
Restricted Stock
Term Sheet
25. 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
Venture Capital Financing
General Partner (GP)
minority enterprise small business investment companies (MESBICS)
Business Plan
26. 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
benchmarks
Angel Financing
Confidentiality
Dividends
27. 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.
minority enterprise small business investment companies (MESBICS)
IPO(initial public offerings)
series a preferred stock
Deal Structure
28. No double tax - Limited number of investors
Private Equity
S Corporation
Liquidity Event
Capital
29. 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
Private Equity
minority enterprise small business investment companies (MESBICS)
Post-money
30. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Cash-out election
Anti-Dilution Protections
Outstanding Stock
Liquidation
31. The amount of this available to a management team for venture investments.
capital under management
equity financing
Due Diligence
return on investment (ROI)
32. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Restricted Shares
Common Equity
capital gain
buyout
33. The company or entity into which a fund invests directly.
Cash-out election
mezzanine financing
portfolio compaay
Business Summary
34. 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.
Deal Structure
corporate venturing
follow-on
Conversion Rights
35. How much the company is worth before an investment
Pre-Money Valuation
buyout
IPO(initial public offerings)
No Shop/Confidentiality
36. 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
Conversion Rights
NDA (Non-disclosure agreement)
Common Stock
Venture Capital Financing
37. The rate at which a company expends net cash over a certain period - usually a month.
institutional investors
Burn Rate
executive summary
General Partner (GP)
38. 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.
Venture Capital Financing
Lead Investor
Qualified IPO
Dividends
39. The residual ownership in a company like a corporation or LLC 51%=control
exit route
Conversion Rights
Subordinated Debt
Equity
40. The method by which an investor will realize an investment.
Common Stock
Elevator Pitch
Series A Preferred Stock
exit route
41. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
capital under management
Pre-Money Valuation
Adjusted Book Value
Business Plan
42. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
exit route
Initial Public Offering
acquisition
benchmarks
43. 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
limited partnerships
small business investment companies (SBIC)
Lead Investor
exit
44. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
Bootstrapping
Liquidation Preference
capital gain
45. 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
term sheet
Membership Interest
debt financing
portfolio compaay
46. 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.
Limited Partner
Senior Stock
Capitalization Table
Preferred Stock
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.
follow-on
Initial Public Offering
Liquidation Preference
Bridge Financing
48. 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
Cash-out election
lead investor
Capital Commitment
Preferred Stock
49. The total value of the company immediately prior to the latest round of financing
angel investors
liquidation
Pre-money valuation
executive summary
50. 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.
term sheet
Liquidation Preference
Pre-Money Valuation
Bridge Financing