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






2. 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






3. 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






4. An IPO that has met certain






5. The residual ownership in a company like a corporation or LLC 51%=control






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






7. 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.






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. 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






10. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






11. This refers to a synopsis of the key points of a business plan.






12. 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.






13. 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






14. No double tax - Limited number of investors






15. The rate of return or profit that an investment is expected to earn.






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






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






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






19. How much the company is worth before an investment






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






21. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






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






24. 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.






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






26. 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.






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






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






29. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






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






32. Letter of intent summarizing the key legal and financial terms






33. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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






35. How you get to vote






36. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






37. 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.






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






39. 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






40. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






41. 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.






42. 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.).






43. 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.






44. 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






45. How you get out






46. 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






47. The way you buy stock






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






49. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






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.