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






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






3. 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.






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






5. 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.






6. 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






7. 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.






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






9. 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.






10. 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






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






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






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






14. 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






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






16. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






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






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






19. 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






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






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






22. How you get to vote






23. 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.






24. 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






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






26. Compound internal rate of return.






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. 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






29. 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.






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






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






32. 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.






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






34. 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






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






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






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






38. 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






39. 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






40. The way you buy stock






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






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






43. 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






44. 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






45. 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.






46. No double tax - Limited number of investors






47. 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






48. 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






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. 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