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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. The practice of a large company taking a minority equity position in a smaller company in a related field.
exit route
corporate venturing
minority enterprise small business investment companies (MESBICS)
capital under management
2. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
secondary public offering
portfolio compaay
Liquidity Event
NDA (Non-disclosure agreement)
3. 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
Voting Rights
Membership Interest
closing
4. 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.
Bootstrapping
turnaround
Term Sheet
executive summary
5. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
private equity
Private Equity
Seed Money
6. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
IPO (Initial Public Offering)
Internal Rate of Return
Adjusted Book Value
No Shop/Confidentiality
7. The company or entity into which a fund invests directly.
return on investment (ROI)
Pre-Money Valuation
portfolio compaay
Initial Public Offering
8. 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
Market Capitalization
Term Sheet
Cash-out election
recapitalization
9. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
mezzanine financing
due diligence
follow-on
term sheet
10. An investment vehicle designed to invest in a diversified group of investment funds.
Adjusted Book Value
fund of funds
private equity
IPO (Initial Public Offering)
11. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
lead investor
Adjusted Book Value
exit
Angel Financing
12. 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.
Adjusted Book Value
Preferred Stock
secondary public offering
Deal Structure
13. 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
Post-Money Valuation
Qualified IPO
raising capital
Warrants
14. 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.
Initial Public Offering
minority enterprise small business investment companies (MESBICS)
mezzanine financing
syndication
15. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Capitalization Table
Seed Money
Senior Stock
Venture Capitalist
16. 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.
Membership Interest
executive summary
capital gain
minority enterprise small business investment companies (MESBICS)
17. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Conversion Rights
management buy-in (MBI)
Anti-Dilution Protections
capital under management
18. 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
going private
bridge loans
small business investment companies (SBIC)
Bootstrapping
19. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
Voting Rights
Corporation (Limited liability and taxation)
capital gain
20. 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
Business Plan
Bridge Financing
going private
IPO (Initial Public Offering)
21. The method by which an investor will realize an investment.
Liquidation Preference
Post-money
Common Equity
exit route
22. 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.
Common Stock
Elevator Pitch
lock-up period
Private Equity
23. A security with limits on its transferability. Usually issued in connection with a private placement
Deal Structure
syndication
Restricted Stock
private investment in public equities (PIPE)
24. A business owned by stockholders who share in its profits but are not personally responsible for its debts
exit
return on investment (ROI)
Corporation (Limited liability and taxation)
Venture Capitalist
25. 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
debt financing
institutional investors
Limited Partnership Agreement
Corporation (Limited liability and taxation)
26. 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
private investment in public equities (PIPE)
Outstanding Stock
Private Equity
portfolio compaay
27. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Bootstrapping
management buy-in (MBI)
Subordinated Debt
Capital Commitment
28. Pre-money valuation plus the amount invested in the latest round
recapitalization
Post-money
secondary public offering
Common Equity
29. Compound internal rate of return.
Market Capitalization
IPO(initial public offerings)
Seed Money
IRR
30. 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
Series A Preferred Stock
Venture Capitalist
IRR
Warrants
31. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Pre-Money Valuation
secondary public offering
capital gain
Membership Interest
32. 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
management buy-in (MBI)
Series A Preferred Stock
Adjusted Book Value
debt financing
33. 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.
series a preferred stock
C Corporation
No Shop/Confidentiality
Bridge Financing
34. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
exit route
Adjusted Book Value
exit
35. 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.
equity financing
Bootstrapping
buyout
Elevator Pitch
36. How you get out
Liquidation Preference
Capital
No Shop/Confidentiality
bridge loans
37. Term sheet for equity offering
Term Sheet
IPO (Initial Public Offering)
Business Summary
Private Equity
38. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
venture capital
Liquidation
IPO (Initial Public Offering)
Pre-Money Valuation
39. Investments by a private equity fund in a publicly traded company - usually at a discount.
Pre-Money Valuation
Series A Preferred Stock
private investment in public equities (PIPE)
leverage buy-out(LBO)
40. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
buyout
Liquidity Event
benchmarks
equity offerings
41. 'I will buy stock at price we negotiate'
Stock Price Agreement
venture capital
private investment in public equities (PIPE)
fund of funds
42. 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.
seed capital
capital gain
management buy-out (MBO)
Preferred Stock
43. 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
follow-on
Private Equity
Business Plan
private equity
44. 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
Restricted Stock
Preferred Stock
equity offerings
Pre-Money Valuation
45. 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
Angel Financing
Dividends
Corporation (Limited liability and taxation)
Common Stock
46. 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
private equity
mezzanine financing
Angel Financing
lead investor
47. 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
Liquidation
portfolio compaay
due diligence
48. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
debt financing
Due Diligence
Dividends
NDA (Non-disclosure agreement)
49. 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
Seed Money
venture capital
Closing
Dividends
50. 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.
exit route
Bridge Financing
acquisition
Post-Money Valuation