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. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






2. The way you buy stock






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






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






5. Selling an interest in your business to an outside party to raise money.






6. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






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






8. 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






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






10. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






11. 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






12. 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






13. Don't talk to the market about the company






14. A study of the background and financial reliability of the company - management team and industry.






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






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






17. 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.






18. A business owned by stockholders who share in its profits but are not personally responsible for its debts






19. Investments by a private equity fund in a publicly traded company - usually at a discount.






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






21. 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






22. 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






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






24. 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.






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. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






27. 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






28. 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






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






30. 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.






31. Term sheet for equity offering






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






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






34. 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






35. 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.






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






37. The internal rate of return on an investment.






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






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






40. The total value of the company immediately prior to the latest round of financing






41. No double tax - Limited number of investors






42. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






43. How much the company is worth before an investment






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






45. 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






46. How you get out






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






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






49. 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 -






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