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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. An IPO that has met certain
secondary purchase
Conversion Rights
Qualified IPO
secondary public offering
2. 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.
executive summary
Bootstrapping
lock-up period
Warrants
3. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Preferred Stock
institutional investors
Private Equity
4. 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
venture capital
Post-Money Valuation
Term Sheet
Qualified IPO
5. 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
bridge loans
seed capital
Pre-Money Valuation
Common Stock
6. How you get to vote
Restricted Stock
Common Stock
Book Value
Voting Rights
7. The maximum amount of cash that a partner is required to contribute under the terms
Senior Stock
Capital Commitment
Membership Interest
Common Stock
8. 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
Capitalization Table
Anti-Dilution Protections
Liquidation Preference
Capital Call 'Drawdown'
9. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
executive summary
due diligence
Bridge Financing
buyout
10. A security with limits on its transferability. Usually issued in connection with a private placement
Conversion Rights
Equity
Liquidation
Restricted Stock
11. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
lead investor
management buy-in (MBI)
Business Plan
secondary purchase
12. Letter of intent summarizing the key legal and financial terms
return on investment (ROI)
management buy-out (MBO)
Term Sheet
Restricted Stock
13. Term sheet for equity offering
lock-up period
angel investors
Post-money
Term Sheet
14. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Voting Rights
acquisition
Series A Preferred Stock
buyout
15. This refers to a synopsis of the key points of a business plan.
executive summary
Capital Commitment
Liquidation
Pre-money valuation
16. 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.).
going private
institutional investors
Membership Interest
seed capital
17. 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.
Capital Commitment
Anti-Dilution Protections
secondary purchase
term sheet
18. 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
Limited Partner
acquisition
Liquidity Event
recapitalization
19. 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
Post-Money Valuation
Dividends
private equity
exit
20. 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
Cash-out election
Preferred Stock
Lead Investor
going private
21. Selling an interest in your business to an outside party to raise money.
lock-up period
Liquidation
Confidentiality
equity financing
22. The company or entity into which a fund invests directly.
portfolio compaay
Anti-Dilution Protections
due diligence
Restricted Stock
23. 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
Corporation (Limited liability and taxation)
capital gain
Membership Interest
24. 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
Voting Rights
Common Stock
term sheet
Pre-money valuation
25. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
acquisition
benchmarks
secondary public offering
26. 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.
Stock Price Agreement
Bootstrapping
Venture Capital Financing
corporate venturing
27. 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
liquidation
institutional investors
No Shop/Confidentiality
Private Equity
28. The practice of a large company taking a minority equity position in a smaller company in a related field.
Capital
corporate venturing
Term Sheet
Warrants
29. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Stock Price Agreement
Preferred Stock
Senior Stock
NDA (Non-disclosure agreement)
30. 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
bridge loans
Senior Stock
Common Stock
Preferred Stock
31. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
private equity
Common Equity
Angel Financing
follow-on
32. 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 -
Capital Call 'Drawdown'
acquisition
limited partnerships
Deal Structure
33. 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
34. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid
Voting Rights
Elevator Pitch
fund of funds
Internal Rate of Return
35. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
fund of funds
Equity
liquidation
angel investors
36. Document between general and limited partnership of each fund spells out details of the partnership.
Due Diligence
Pre-Money Valuation
Capital
Limited Partnership Agreement
37. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
C Corporation
Conversion Rights
benchmarks
PPM
38. Date the LP's subscription is effective and they become partner
Membership Interest
Series A Preferred Stock
S Corporation
Closing
39. 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
Bootstrapping
capital under management
Restricted Shares
Common Stock
40. 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
Voting Rights
Pre-Money Valuation
Term Sheet
41. 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.
lead investor
Qualified IPO
liquidation
Senior Stock
42. How much the company is worth before an investment
Limited Partner
Due Diligence
Pre-Money Valuation
raising capital
43. 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
S Corporation
Preferred Stock
Term Sheet
Burn Rate
44. Assets are subject to double taxation - Unlimited number of investors
C Corporation
minority enterprise small business investment companies (MESBICS)
Closing
Post-money
45. 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.
Pre-Money Valuation
management buy-out (MBO)
Liquidation Preference
due diligence
46. Cannot get other outside investors-No Shop
Liquidation Preference
Capital
term sheet
No Shop/Confidentiality
47. 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.
acquisition
exit route
liquidation
Common Stock
48. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
institutional investors
Capital Commitment
Deal Structure
49. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Closing
acquisition
Equity
50. A study of the background and financial reliability of the company - management team and industry.
Limited Partner
Common Stock
Due Diligence
Liquidation