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






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






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






4. 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.






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






6. 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






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






8. How much the company is worth before an investment






9. 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.






10. No double tax - Limited number of investors






11. 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






12. Compound internal rate of return.






13. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






14. 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.).






15. How you get out






16. 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.






17. 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






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






19. The way you buy stock






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






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






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






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






24. 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






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






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






27. 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.






28. 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






29. 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






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






31. 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.






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






33. 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.






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 value at which an asset is carried on a balance sheet (the cost of the item)






36. The internal rate of return on an investment.






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






38. 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 -






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






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






41. 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.






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






43. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






44. 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.






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






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






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






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






49. 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






50. 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.