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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. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
NDA (Non-disclosure agreement)
Capital
Angel Financing
2. 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
Pre-Money Valuation
IPO (Initial Public Offering)
Capital
3. 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.
lock-up period
management buy-in (MBI)
Angel Financing
Initial Public Offering
4. Assets are subject to double taxation - Unlimited number of investors
Pre-Money Valuation
exit
C Corporation
recapitalization
5. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
equity offerings
IPO(initial public offerings)
going private
Business Summary
6. Pre-money valuation plus the amount invested in the latest round
Pre-Money Valuation
Post-money
PPM
Subordinated Debt
7. 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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8. 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
Confidentiality
S Corporation
follow-on
seed capital
9. 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
Capitalization Table
Preferred Stock
Qualified IPO
Lead Investor
10. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Liquidation Preference
IPO (Initial Public Offering)
No Shop/Confidentiality
11. 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.
secondary purchase
Seed Money
Qualified IPO
syndication
12. An investment vehicle designed to invest in a diversified group of investment funds.
IPO (Initial Public Offering)
Membership Interest
fund of funds
seed capital
13. 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.
angel investors
Preferred Stock
raising capital
limited partnerships
14. Investments by a private equity fund in a publicly traded company - usually at a discount.
small business investment companies (SBIC)
private investment in public equities (PIPE)
due diligence
executive summary
15. The company or entity into which a fund invests directly.
Liquidation Preference
portfolio compaay
IRR
IPO (Initial Public Offering)
16. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Confidentiality
Book Value
Capital
17. 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
Preferred Stock
Series A Preferred Stock
institutional investors
18. Issue of shares of a company to the public by the company (directly) for the first time.
Closing
IPO(initial public offerings)
Common Stock
secondary public offering
19. 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
exit
term sheet
institutional investors
series a preferred stock
20. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Deal Structure
IRR
Limited Partnership Agreement
closing
21. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Business Summary
Membership Interest
small business investment companies (SBIC)
Private Equity
22. The party that manages a limited partnership and is liable for the debts of the company
Common Equity
General Partner (GP)
Pre-Money Valuation
Lead Investor
23. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
bridge loans
Anti-Dilution Protections
Private Equity
24. A security with limits on its transferability. Usually issued in connection with a private placement
Lead Investor
Liquidation Preference
Restricted Stock
management buy-out (MBO)
25. 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
venture capital
Corporation (Limited liability and taxation)
IPO (Initial Public Offering)
C Corporation
26. 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
Equity
Capitalization Table
Conversion Rights
Book Value
27. 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
Capital
Outstanding Stock
acquisition
28. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Seed Money
Limited Partnership Agreement
benchmarks
Capital
29. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap
Term Sheet
Seed Money
Dividends
Confidentiality
30. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Preferred Stock
secondary purchase
Stock Price Agreement
31. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
angel investors
Restricted Shares
Liquidation Preference
capital gain
32. The residual ownership in a company like a corporation or LLC 51%=control
buyout
NDA (Non-disclosure agreement)
C Corporation
Equity
33. 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
mezzanine financing
Common Stock
secondary purchase
Elevator Pitch
34. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Due Diligence
Limited Partnership Agreement
Term Sheet
equity offerings
35. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Conversion Rights
benchmarks
management buy-in (MBI)
Adjusted Book Value
36. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Limited Partner
exit
NDA (Non-disclosure agreement)
IPO (Initial Public Offering)
37. Letter of intent summarizing the key legal and financial terms
Capitalization Table
Term Sheet
portfolio compaay
equity financing
38. The internal rate of return on an investment.
Voting Rights
return on investment (ROI)
Venture Capitalist
mezzanine financing
39. 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
minority enterprise small business investment companies (MESBICS)
Liquidation Preference
leverage buy-out(LBO)
buyout
40. The way you buy stock
Stock Price Agreement
PPM
due diligence
Outstanding Stock
41. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Book Value
Cash-out election
angel investors
Pre-Money Valuation
42. Cannot get other outside investors-No Shop
Dividends
Equity
raising capital
No Shop/Confidentiality
43. 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
benchmarks
Limited Partner
going private
Stock Price Agreement
44. 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.
Warrants
recapitalization
Membership Interest
portfolio compaay
45. 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.
Common Stock
turnaround
Initial Public Offering
Bridge Financing
46. 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.
Pre-Money Valuation
term sheet
exit route
turnaround
47. Don't talk to the market about the company
Liquidation
lock-up period
Confidentiality
Due Diligence
48. 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
Private Equity
return on investment (ROI)
management buy-in (MBI)
Lead Investor
49. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
General Partner (GP)
Anti-Dilution Protections
Conversion Rights
leverage buy-out(LBO)
50. 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
corporate venturing
liquidation
Preferred Stock
private equity