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






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






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






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






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






6. 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.






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






8. 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.






9. 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






10. 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






11. 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.






12. How much the company is worth before an investment






13. 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






14. How you get out






15. An IPO that has met certain






16. 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






17. 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






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






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






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






21. 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






22. 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






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






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






25. 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.






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






27. Compound internal rate of return.






28. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.






29. How you get to vote






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






31. 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






32. 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.






33. 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






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






35. 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






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






37. 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.






38. 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






39. The practice of a large company taking a minority equity position in a smaller company in a related field.






40. 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.).






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






42. 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






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






44. 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.






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






46. Selling an interest in your business to an outside party to raise money.






47. The amount of this available to a management team for venture investments.






48. 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.






49. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






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