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Test your basic knowledge |
Venture Capital
Start Test
Study First
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 investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
small business investment companies (SBIC)
lead investor
private equity
due diligence
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) ...
Initial Public Offering
Corporation (Limited liability and taxation)
fund of funds
Lead Investor
3. Cannot get other outside investors-No Shop
Qualified IPO
No Shop/Confidentiality
Limited Partner
Seed Money
4. 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.
Business Plan
management buy-out (MBO)
Anti-Dilution Protections
Private Equity
5. 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
Due Diligence
secondary purchase
Common Equity
Business Plan
6. 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
angel investors
Confidentiality
benchmarks
series a preferred stock
7. A business owned by stockholders who share in its profits but are not personally responsible for its debts
buyout
seed capital
Corporation (Limited liability and taxation)
Confidentiality
8. The method by which an investor will realize an investment.
Liquidation Preference
exit route
Adjusted Book Value
private equity
9. 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.
buyout
equity financing
syndication
Restricted Stock
10. How you get to vote
Business Plan
Liquidation Preference
management buy-out (MBO)
Voting Rights
11. 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
Limited Partner
small business investment companies (SBIC)
Cash-out election
Due Diligence
12. 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
Capitalization Table
Market Capitalization
secondary public offering
Venture Capital Financing
13. The equity ownership in a corporation. Also has basic voting rights
term sheet
Common Equity
Deal Structure
Common Stock
14. 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
Series A Preferred Stock
Preferred Stock
IRR
Liquidation Preference
15. 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
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16. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
Limited Partner
Voting Rights
Cash-out election
17. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
Restricted Stock
lock-up period
debt financing
18. The party that manages a limited partnership and is liable for the debts of the company
IPO(initial public offerings)
General Partner (GP)
series a preferred stock
Capital Commitment
19. The value at which an asset is carried on a balance sheet (the cost of the item)
Liquidation
Preferred Stock
bridge loans
Book Value
20. Letter of intent summarizing the key legal and financial terms
return on investment (ROI)
Term Sheet
Book Value
limited partnerships
21. This refers to a synopsis of the key points of a business plan.
Private Equity
limited partnerships
executive summary
benchmarks
22. 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
equity offerings
Liquidation Preference
benchmarks
private equity
23. Selling an interest in your business to an outside party to raise money.
equity financing
return on investment (ROI)
IPO(initial public offerings)
due diligence
24. How much the company is worth before an investment
Pre-Money Valuation
Venture Capitalist
Liquidation
portfolio compaay
25. 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
liquidation
Dividends
Preferred Stock
corporate venturing
26. 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
Stock Price Agreement
Post-Money Valuation
due diligence
going private
27. 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
Term Sheet
venture capital
Voting Rights
small business investment companies (SBIC)
28. No double tax - Limited number of investors
Pre-Money Valuation
Pre-Money Valuation
closing
S Corporation
29. 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.
Outstanding Stock
Venture Capitalist
debt financing
seed capital
30. 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.
Bridge Financing
exit
Term Sheet
Membership Interest
31. 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
Elevator Pitch
Due Diligence
Liquidation Preference
Limited Partner
32. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Capitalization Table
NDA (Non-disclosure agreement)
lead investor
management buy-in (MBI)
33. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
equity financing
Common Stock
Liquidity Event
Liquidation
34. Issue of shares of a company to the public by the company (directly) for the first time.
Private Equity
return on investment (ROI)
IPO(initial public offerings)
Closing
35. How you get out
Restricted Shares
Liquidation Preference
Anti-Dilution Protections
leverage buy-out(LBO)
36. 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
Equity
Capitalization Table
portfolio compaay
seed capital
37. 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.
lead investor
turnaround
Business Plan
Deal Structure
38. 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.
Internal Rate of Return
turnaround
return on investment (ROI)
Limited Partner
39. 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.
going private
NDA (Non-disclosure agreement)
Burn Rate
lock-up period
40. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
Internal Rate of Return
term sheet
IRR
41. 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.
Confidentiality
Business Plan
mezzanine financing
Qualified IPO
42. 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
Capitalization Table
seed capital
Preferred Stock
Book Value
43. The maximum amount of cash that a partner is required to contribute under the terms
PPM
Senior Stock
Capital Commitment
Elevator Pitch
44. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
limited partnerships
General Partner (GP)
Angel Financing
S Corporation
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.
liquidation
limited partnerships
capital under management
executive summary
46. 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
Post-Money Valuation
turnaround
limited partnerships
venture capital
47. 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.).
institutional investors
angel investors
secondary public offering
management buy-in (MBI)
48. The way you buy stock
IRR
corporate venturing
PPM
syndication
49. 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
Pre-Money Valuation
due diligence
Voting Rights
Post-Money Valuation
50. 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.
Venture Capital Financing
Term Sheet
Corporation (Limited liability and taxation)
Liquidation Preference