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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. How much the company is worth before an investment
Conversion Rights
executive summary
limited partnerships
Pre-Money Valuation
2. 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
leverage buy-out(LBO)
Conversion Rights
PPM
IPO (Initial Public Offering)
3. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
private investment in public equities (PIPE)
Capitalization Table
buyout
4. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Term Sheet
Adjusted Book Value
equity financing
5. Don't talk to the market about the company
institutional investors
Seed Money
Outstanding Stock
Confidentiality
6. 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.
Preferred Stock
Post-Money Valuation
Outstanding Stock
Due Diligence
7. 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.
private investment in public equities (PIPE)
recapitalization
Burn Rate
exit
8. Selling an interest in your business to an outside party to raise money.
Closing
equity financing
equity offerings
Initial Public Offering
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.
Corporation (Limited liability and taxation)
management buy-out (MBO)
Post-money
leverage buy-out(LBO)
10. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot
Dividends
venture capital
Preferred Stock
Venture Capitalist
11. 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
Venture Capital Financing
recapitalization
Closing
Preferred Stock
12. 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.
lead investor
NDA (Non-disclosure agreement)
Due Diligence
fund of funds
13. 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.
bridge loans
Liquidation
Conversion Rights
term sheet
14. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
lock-up period
follow-on
Adjusted Book Value
Conversion Rights
15. 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
Liquidation Preference
Pre-money valuation
secondary public offering
16. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
seed capital
Market Capitalization
Capital
17. Assets are subject to double taxation - Unlimited number of investors
C Corporation
Term Sheet
Conversion Rights
benchmarks
18. 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
angel investors
Restricted Shares
Internal Rate of Return
Post-Money Valuation
19. The method by which an investor will realize an investment.
Limited Partner
exit route
IPO (Initial Public Offering)
Angel Financing
20. 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.
Preferred Stock
Market Capitalization
turnaround
IPO (Initial Public Offering)
21. Term sheet for equity offering
Term Sheet
Book Value
Seed Money
Pre-Money Valuation
22. 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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23. 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.
Preferred Stock
Internal Rate of Return
Post-Money Valuation
secondary public offering
24. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
bridge loans
S Corporation
Common Equity
syndication
25. The practice of a large company taking a minority equity position in a smaller company in a related field.
Elevator Pitch
corporate venturing
Seed Money
Subordinated Debt
26. Cannot get other outside investors-No Shop
angel investors
Preferred Stock
No Shop/Confidentiality
exit
27. The amount of this available to a management team for venture investments.
mezzanine financing
capital under management
Senior Stock
IRR
28. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
due diligence
Membership Interest
Business Summary
Dividends
29. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Pre-Money Valuation
Capital Call 'Drawdown'
Business Summary
small business investment companies (SBIC)
30. Pre-money valuation plus the amount invested in the latest round
Liquidity Event
Bridge Financing
Post-money
Liquidation Preference
31. 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
Business Summary
leverage buy-out(LBO)
capital under management
Capitalization Table
32. 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
Warrants
Outstanding Stock
private equity
33. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
exit
secondary purchase
Capitalization Table
34. How you get to vote
IPO(initial public offerings)
Preferred Stock
term sheet
Voting Rights
35. 'I will buy stock at price we negotiate'
corporate venturing
Stock Price Agreement
Seed Money
bridge loans
36. 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 -
Common Equity
limited partnerships
Conversion Rights
series a preferred stock
37. 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
Preferred Stock
Lead Investor
Pre-Money Valuation
portfolio compaay
38. 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
institutional investors
seed capital
Bootstrapping
acquisition
39. 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
acquisition
Term Sheet
Restricted Shares
series a preferred stock
40. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
debt financing
Bridge Financing
leverage buy-out(LBO)
41. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
equity offerings
Angel Financing
return on investment (ROI)
Adjusted Book Value
42. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Deal Structure
buyout
Confidentiality
Lead Investor
43. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Elevator Pitch
Conversion Rights
Capital
44. The equity ownership in a corporation. Also has basic voting rights
Common Stock
raising capital
lead investor
Business Plan
45. 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
Business Plan
Common Equity
equity financing
Initial Public Offering
46. 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
institutional investors
Capital Commitment
Conversion Rights
venture capital
47. 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.
Equity
lead investor
buyout
syndication
48. The way you buy stock
Capital Call 'Drawdown'
IPO(initial public offerings)
PPM
Business Plan
49. 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.
No Shop/Confidentiality
Elevator Pitch
Preferred Stock
exit
50. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
recapitalization
corporate venturing
Limited Partnership Agreement