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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. 'I will buy stock at price we negotiate'
Anti-Dilution Protections
Initial Public Offering
Business Summary
Stock Price Agreement
2. Letter of intent summarizing the key legal and financial terms
Term Sheet
Capitalization Table
IPO (Initial Public Offering)
IRR
3. A security with limits on its transferability. Usually issued in connection with a private placement
bridge loans
limited partnerships
Capital
Restricted Stock
4. 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.
recapitalization
Bootstrapping
Capital Commitment
Angel Financing
5. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Dividends
IPO(initial public offerings)
Bridge Financing
6. This refers to obtaining capital from investors or venture capital sources.
Adjusted Book Value
raising capital
management buy-out (MBO)
Term Sheet
7. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Term Sheet
closing
limited partnerships
Subordinated Debt
8. 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.
Outstanding Stock
minority enterprise small business investment companies (MESBICS)
Capital
syndication
9. 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.).
secondary purchase
PPM
Conversion Rights
institutional investors
10. 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
going private
Pre-Money Valuation
exit
Outstanding Stock
11. The method by which an investor will realize an investment.
minority enterprise small business investment companies (MESBICS)
exit route
Adjusted Book Value
C Corporation
12. Date the LP's subscription is effective and they become partner
Closing
buyout
corporate venturing
Private Equity
13. 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.
Closing
Preferred Stock
IPO(initial public offerings)
Business Plan
14. Issue of shares of a company to the public by the company (directly) for the first time.
Venture Capital Financing
General Partner (GP)
lead investor
IPO(initial public offerings)
15. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
going private
limited partnerships
management buy-in (MBI)
Business Plan
16. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
capital under management
exit
Liquidity Event
due diligence
17. 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.
Limited Partnership Agreement
lock-up period
Capital Call 'Drawdown'
debt financing
18. The amount of this available to a management team for venture investments.
General Partner (GP)
capital under management
limited partnerships
recapitalization
19. The practice of a large company taking a minority equity position in a smaller company in a related field.
follow-on
Cash-out election
management buy-in (MBI)
corporate venturing
20. The way you buy stock
lead investor
corporate venturing
Equity
PPM
21. An investment vehicle designed to invest in a diversified group of investment funds.
Liquidity Event
fund of funds
management buy-in (MBI)
corporate venturing
22. 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
Capitalization Table
Dividends
lead investor
due diligence
23. The equity ownership in a corporation. Also has basic voting rights
Business Summary
Limited Partner
Common Stock
seed capital
24. 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.
Outstanding Stock
liquidation
Common Stock
Liquidation Preference
25. 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.
Bridge Financing
capital gain
Venture Capital Financing
angel investors
26. 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
Venture Capitalist
return on investment (ROI)
IRR
private investment in public equities (PIPE)
27. 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
equity offerings
series a preferred stock
Cash-out election
recapitalization
28. The internal rate of return on an investment.
management buy-out (MBO)
return on investment (ROI)
Market Capitalization
General Partner (GP)
29. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Anti-Dilution Protections
Initial Public Offering
Capital
IPO (Initial Public Offering)
30. 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
Common Stock
Bridge Financing
Angel Financing
Capitalization Table
31. 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
Cash-out election
seed capital
buyout
Limited Partner
32. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Capital Commitment
secondary purchase
series a preferred stock
33. The residual ownership in a company like a corporation or LLC 51%=control
Bridge Financing
Senior Stock
Equity
recapitalization
34. 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.
exit
No Shop/Confidentiality
management buy-out (MBO)
Corporation (Limited liability and taxation)
35. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
due diligence
lead investor
Term Sheet
36. 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
Term Sheet
Qualified IPO
No Shop/Confidentiality
Business Plan
37. How you get out
Liquidation Preference
Qualified IPO
leverage buy-out(LBO)
Stock Price Agreement
38. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
private investment in public equities (PIPE)
Senior Stock
acquisition
follow-on
39. 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
bridge loans
lock-up period
Preferred Stock
small business investment companies (SBIC)
40. Term sheet for equity offering
Term Sheet
Confidentiality
benchmarks
management buy-in (MBI)
41. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Venture Capital Financing
buyout
management buy-in (MBI)
NDA (Non-disclosure agreement)
42. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
term sheet
private equity
Membership Interest
portfolio compaay
43. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Confidentiality
equity offerings
Liquidity Event
small business investment companies (SBIC)
44. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
Preferred Stock
exit
mezzanine financing
45. 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
No Shop/Confidentiality
Membership Interest
benchmarks
minority enterprise small business investment companies (MESBICS)
46. Compound internal rate of return.
secondary purchase
raising capital
No Shop/Confidentiality
IRR
47. 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
liquidation
fund of funds
Series A Preferred Stock
turnaround
48. The party that manages a limited partnership and is liable for the debts of the company
Angel Financing
General Partner (GP)
Venture Capitalist
closing
49. 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.
IPO(initial public offerings)
seed capital
acquisition
Common Stock
50. 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
Elevator Pitch
leverage buy-out(LBO)
Preferred Stock
Qualified IPO