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






2. No double tax - Limited number of investors






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






4. 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






5. Compound internal rate of return.






6. The way you buy stock






7. 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.






8. 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.






9. 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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10. Cannot get other outside investors-No Shop






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






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






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.






14. 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






15. 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






16. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






17. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






19. 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






20. An IPO that has met certain






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






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






23. 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






24. 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.






25. 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






26. 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






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






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






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






30. 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






31. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






32. Term sheet for equity offering






33. The rate at which a company expends net cash over a certain period - usually a month.






34. This refers to obtaining capital from investors or venture capital sources.






35. 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






36. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






38. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






39. The method by which an investor will realize an investment.






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






41. 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.






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






43. 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.






44. 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






45. 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






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






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






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






49. 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 -






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