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. 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.






2. 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.






3. How much the company is worth before an investment






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






5. Term sheet for equity offering






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






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






8. 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.






9. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the






10. 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






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






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






13. 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.






14. 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


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






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






17. 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.






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






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






20. 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






21. 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






22. 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






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






24. 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






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






26. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






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






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






29. 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.






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






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






32. 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.






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






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






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






36. 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






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






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






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






40. 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






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






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






43. 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.






44. Compound internal rate of return.






45. 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.






46. How you get out






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






48. 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






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






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