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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. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
closing
Dividends
capital under management
buyout
2. The amount of this available to a management team for venture investments.
Adjusted Book Value
No Shop/Confidentiality
Deal Structure
capital under management
3. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
secondary purchase
exit
Subordinated Debt
limited partnerships
4. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
Warrants
Corporation (Limited liability and taxation)
syndication
5. 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
Pre-Money Valuation
Burn Rate
Pre-money valuation
debt financing
6. 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.
going private
C Corporation
Angel Financing
turnaround
7. 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.
Elevator Pitch
Book Value
Preferred Stock
Limited Partner
8. Compound internal rate of return.
Venture Capitalist
IRR
recapitalization
going private
9. The practice of a large company taking a minority equity position in a smaller company in a related field.
leverage buy-out(LBO)
equity financing
Liquidity Event
corporate venturing
10. 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
institutional investors
minority enterprise small business investment companies (MESBICS)
Book Value
Dividends
11. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Anti-Dilution Protections
Dividends
Membership Interest
Capital
12. A security with limits on its transferability. Usually issued in connection with a private placement
return on investment (ROI)
acquisition
closing
Restricted Stock
13. 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.
exit
lead investor
Liquidation
turnaround
14. The value at which an asset is carried on a balance sheet (the cost of the item)
Common Stock
secondary purchase
Book Value
debt financing
15. The rate of return or profit that an investment is expected to earn.
Corporation (Limited liability and taxation)
turnaround
Internal Rate of Return
Initial Public Offering
16. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Initial Public Offering
Liquidity Event
Limited Partner
minority enterprise small business investment companies (MESBICS)
17. 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
Series A Preferred Stock
Burn Rate
No Shop/Confidentiality
return on investment (ROI)
18. 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
Term Sheet
Seed Money
Capitalization Table
IRR
19. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Capital Call 'Drawdown'
Common Equity
Pre-money valuation
secondary purchase
20. This refers to obtaining capital from investors or venture capital sources.
raising capital
Preferred Stock
Term Sheet
Venture Capitalist
21. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
buyout
Term Sheet
Outstanding Stock
22. The maximum amount of cash that a partner is required to contribute under the terms
mezzanine financing
Capital Commitment
Post-Money Valuation
limited partnerships
23. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Business Plan
Term Sheet
Liquidation
equity financing
24. 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
Stock Price Agreement
Post-Money Valuation
Senior Stock
exit route
25. 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
Liquidation Preference
angel investors
Venture Capital Financing
Limited Partnership Agreement
26. 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
Pre-Money Valuation
No Shop/Confidentiality
Restricted Stock
minority enterprise small business investment companies (MESBICS)
27. 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
Internal Rate of Return
S Corporation
liquidation
seed capital
28. The total value of the company immediately prior to the latest round of financing
Adjusted Book Value
Term Sheet
Pre-money valuation
Confidentiality
29. 'I will buy stock at price we negotiate'
capital gain
Conversion Rights
Stock Price Agreement
corporate venturing
30. The way you buy stock
PPM
recapitalization
seed capital
Elevator Pitch
31. A study of the background and financial reliability of the company - management team and industry.
Restricted Shares
Due Diligence
PPM
exit route
32. 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
management buy-out (MBO)
Lead Investor
Outstanding Stock
Due Diligence
33. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
institutional investors
Market Capitalization
Business Summary
34. Assets are subject to double taxation - Unlimited number of investors
Preferred Stock
lock-up period
C Corporation
Liquidation Preference
35. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Common Stock
Qualified IPO
exit
Closing
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
Common Stock
Qualified IPO
capital gain
C Corporation
37. 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
Stock Price Agreement
small business investment companies (SBIC)
Restricted Stock
due diligence
38. This refers to a synopsis of the key points of a business plan.
Equity
Elevator Pitch
executive summary
series a preferred stock
39. 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
Seed Money
IPO (Initial Public Offering)
lead investor
benchmarks
40. 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
seed capital
follow-on
C Corporation
41. 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
42. 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.
Burn Rate
syndication
angel investors
Market Capitalization
43. 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.
IPO (Initial Public Offering)
Limited Partnership Agreement
minority enterprise small business investment companies (MESBICS)
equity financing
44. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Pre-Money Valuation
equity financing
Market Capitalization
45. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.
lock-up period
going private
Capital Call 'Drawdown'
Term Sheet
46. 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.
capital under management
benchmarks
Angel Financing
Bootstrapping
47. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Private Equity
management buy-in (MBI)
Capital Call 'Drawdown'
Senior Stock
48. How you get out
Liquidation Preference
Liquidation
exit
Preferred Stock
49. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
exit route
management buy-in (MBI)
leverage buy-out(LBO)
secondary purchase
50. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Business Summary
debt financing
secondary public offering