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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






2. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






3. 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.).






4. The equity ownership in a corporation. Also has basic voting rights






5. 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

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6. Pre-money valuation plus the amount invested in the latest round






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






8. 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.






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






10. Term sheet for equity offering






11. 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






12. 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






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






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






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






16. 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






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






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






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






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






21. Document between general and limited partnership of each fund spells out details of the partnership.






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






23. 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






24. 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






25. 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






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






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






28. An IPO that has met certain






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






30. 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.






31. 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.






32. 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.






33. 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






34. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






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






36. 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.






37. 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






38. 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






39. 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






40. How you get out






41. Issue of shares of a company to the public by the company (directly) for the first time.






42. 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






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






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






45. How much the company is worth before an investment






46. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






47. 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






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






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






50. 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.