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






2. 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






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






4. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






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






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






7. 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 -






8. 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.






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






10. An investment vehicle designed to invest in a diversified group of investment funds.






11. 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






12. An IPO that has met certain






13. 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.






14. 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






15. 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.






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






17. How you get to vote






18. Cannot get other outside investors-No Shop






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






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






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






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






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






24. Investments by a private equity fund in a publicly traded company - usually at a discount.






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






26. 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






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






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






29. Pre-money valuation plus the amount invested in the latest round






30. 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






31. 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.






32. 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.).






33. Don't talk to the market about the company






34. 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






35. 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.






36. The party that manages a limited partnership and is liable for the debts of the company






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






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






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






40. 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.






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






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






43. 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






44. 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






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






46. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo






47. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






48. 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






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






50. 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