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






2. 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) ...






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






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






5. 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.






6. 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






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






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






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






10. No double tax - Limited number of investors






11. 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






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






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






14. 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.






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






17. 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






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






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






20. 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.






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






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






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






24. 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






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






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






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






28. 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.






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






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






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






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






33. 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






34. 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






35. 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






36. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






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






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






39. The rate of return or profit that an investment is expected to earn.






40. The way you buy stock






41. 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






42. An IPO that has met certain






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






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






45. 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






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






47. 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






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






49. 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.






50. 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