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 way you buy stock






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






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






4. Compound internal rate of return.






5. 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.






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






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






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






9. 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






10. 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






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






12. Issue of shares of a company to the public by the company (directly) for the first time.






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






14. 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.






15. 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






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






17. 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






18. 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






19. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






20. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






21. 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






22. 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






23. 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






24. 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.






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






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






27. 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






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






29. 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






30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






31. 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.






32. 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






33. 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






34. 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.






35. How you get out






36. 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


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






38. 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






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






40. Cannot get other outside investors-No Shop






41. 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






42. 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 -






43. 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.






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






45. Term sheet for equity offering






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






47. 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.






48. 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






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






50. 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