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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. 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.






2. 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) ...






3. 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 -






4. How you get to vote






5. 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.






6. The way you buy stock






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






8. 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






9. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






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






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






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






13. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






14. 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.






15. The maximum amount of cash that a partner is required to contribute under the terms






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






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






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






19. 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






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






21. 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






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






23. No double tax - Limited number of investors






24. 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






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






27. 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.






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






30. 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






31. 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






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






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






34. Term sheet for equity offering






35. 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.






36. 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.






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






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






39. 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






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






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






42. 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.






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






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






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






46. 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






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






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






49. How you get out






50. 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.