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. No double tax - Limited number of investors






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






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






4. 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






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






6. How much the company is worth before an investment






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






8. 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






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






10. How you get out






11. 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






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






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






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






15. 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) ...






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






17. 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






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






19. 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.






20. An IPO that has met certain






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






22. 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.






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






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






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






26. 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






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






28. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






29. How you get to vote






30. 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.






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






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






33. 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






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






35. 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






36. 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






37. 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






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






39. 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.






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






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. 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.






43. 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.






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






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






46. 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.






47. Term sheet for equity offering






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






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






50. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.