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






2. 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 -






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






4. 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.






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






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






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






8. 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.






9. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






10. An IPO that has met certain






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






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






13. The value at which an asset is carried on a balance sheet (the cost of the item)






14. 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






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






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






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






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






19. 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






20. 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






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. 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.).






23. 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






24. 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) ...






25. No double tax - Limited number of investors






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






27. 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






28. 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.






29. 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.






30. 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






31. An investment vehicle designed to invest in a diversified group of investment funds.






32. How you get to vote






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






34. The maximum amount of cash that a partner is required to contribute under the terms






35. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.






36. 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






37. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






38. 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






39. How you get out






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






41. 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






42. 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






43. 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






44. The way you buy stock






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






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






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






48. 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.






49. The total value of the company immediately prior to the latest round of financing






50. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri