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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. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
Elevator Pitch
Pre-Money Valuation
Venture Capital Financing
syndication
2. 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
Senior Stock
institutional investors
Anti-Dilution Protections
Limited Partner
3. 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.
Restricted Shares
Elevator Pitch
liquidation
mezzanine financing
4. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Term Sheet
Liquidity Event
Capital Commitment
Term Sheet
5. The company or entity into which a fund invests directly.
Subordinated Debt
portfolio compaay
series a preferred stock
Preferred Stock
6. 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 financing
private investment in public equities (PIPE)
Closing
syndication
7. 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
Pre-Money Valuation
angel investors
syndication
IRR
8. 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
Seed Money
equity offerings
benchmarks
liquidation
9. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Venture Capital Financing
Post-Money Valuation
exit
Angel Financing
10. 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 -
lock-up period
return on investment (ROI)
limited partnerships
minority enterprise small business investment companies (MESBICS)
11. 'I will buy stock at price we negotiate'
management buy-out (MBO)
Closing
Stock Price Agreement
Corporation (Limited liability and taxation)
12. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
recapitalization
corporate venturing
Bridge Financing
closing
13. 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
small business investment companies (SBIC)
going private
lead investor
recapitalization
14. 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
limited partnerships
Due Diligence
Pre-money valuation
15. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
recapitalization
Anti-Dilution Protections
management buy-out (MBO)
leverage buy-out(LBO)
16. 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
Initial Public Offering
S Corporation
closing
Series A Preferred Stock
17. 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
going private
General Partner (GP)
equity financing
Voting Rights
18. 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
bridge loans
Common Stock
Adjusted Book Value
debt financing
19. 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
Preferred Stock
Capital Commitment
buyout
seed capital
20. Investments by a private equity fund in a publicly traded company - usually at a discount.
Market Capitalization
private investment in public equities (PIPE)
Restricted Stock
Membership Interest
21. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Closing
Common Equity
exit
22. 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.
Qualified IPO
Initial Public Offering
liquidation
Preferred Stock
23. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...
Initial Public Offering
Voting Rights
seed capital
Capital
24. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Venture Capitalist
acquisition
follow-on
Angel Financing
25. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Venture Capitalist
Corporation (Limited liability and taxation)
Warrants
Book Value
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
Burn Rate
liquidation
Elevator Pitch
executive summary
27. 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.).
Subordinated Debt
management buy-out (MBO)
buyout
institutional investors
28. Don't talk to the market about the company
Confidentiality
Pre-money valuation
due diligence
Deal Structure
29. Letter of intent summarizing the key legal and financial terms
S Corporation
Bridge Financing
turnaround
Term Sheet
30. The practice of a large company taking a minority equity position in a smaller company in a related field.
Liquidity Event
equity offerings
small business investment companies (SBIC)
corporate venturing
31. This refers to a synopsis of the key points of a business plan.
equity offerings
IPO (Initial Public Offering)
PPM
executive summary
32. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
management buy-in (MBI)
Term Sheet
Deal Structure
Common Equity
33. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
capital gain
acquisition
Business Summary
Common Stock
34. 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)
capital gain
Liquidation
acquisition
35. How you get out
Due Diligence
exit
liquidation
Liquidation Preference
36. 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
bridge loans
PPM
due diligence
limited partnerships
37. 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
acquisition
Business Plan
Market Capitalization
IPO(initial public offerings)
38. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
due diligence
Post-money
recapitalization
39. The amount of this available to a management team for venture investments.
exit
capital under management
Stock Price Agreement
Angel Financing
40. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
PPM
follow-on
Cash-out election
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.
Term Sheet
secondary purchase
Bootstrapping
follow-on
42. Pre-money valuation plus the amount invested in the latest round
venture capital
Limited Partner
Post-money
IRR
43. 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
mezzanine financing
Post-Money Valuation
capital gain
raising capital
44. No double tax - Limited number of investors
venture capital
S Corporation
Warrants
corporate venturing
45. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
No Shop/Confidentiality
Preferred Stock
recapitalization
46. Assets are subject to double taxation - Unlimited number of investors
Business Summary
C Corporation
Outstanding Stock
acquisition
47. A study of the background and financial reliability of the company - management team and industry.
Restricted Stock
Due Diligence
Limited Partner
management buy-in (MBI)
48. Date the LP's subscription is effective and they become partner
Pre-Money Valuation
Business Plan
Market Capitalization
Closing
49. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi
benchmarks
Pre-Money Valuation
executive summary
Burn Rate
50. 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.
syndication
raising capital
Internal Rate of Return
turnaround