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






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






3. 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






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






5. 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






6. Cannot get other outside investors-No Shop






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






8. A security with limits on its transferability. Usually issued in connection with a private placement






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






10. The residual ownership in a company like a corporation or LLC 51%=control






11. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






12. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






13. 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.






14. 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






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






16. 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.






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






18. 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.






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






20. 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.






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






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






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






24. 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






25. 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






26. 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.






27. 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.






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






29. 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.).






30. 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 -






31. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






32. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






33. 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






34. 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.






35. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.






36. 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






37. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






38. 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






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






40. 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






41. The total value of the company immediately prior to the latest round of financing






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






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






44. 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






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






46. Compound internal rate of return.






47. 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






48. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.






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






50. The internal rate of return on an investment.