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. 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






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






3. 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






4. How you get to vote






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






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






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






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






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






10. 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.






11. 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.






12. 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






13. How you get out






14. 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.






15. Compound internal rate of return.






16. 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 -






17. 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






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






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






20. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.






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






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






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






24. 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






25. 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






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






27. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.






28. 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.






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






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






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






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






33. 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






34. The internal rate of return on an investment.






35. 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






36. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






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






38. 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






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






40. 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






41. 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.






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






43. 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.






44. 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






45. 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.






46. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






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






48. 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.






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






50. 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.