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






2. 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) ...






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






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






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






6. 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






7. The internal rate of return on an investment.






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






9. 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.






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






11. 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






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






13. How you get out






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






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






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






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






18. 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






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






20. 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.






21. A business owned by stockholders who share in its profits but are not personally responsible for its debts






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






23. 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






24. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






25. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






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






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






28. How much the company is worth before an investment






29. 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.






30. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






31. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






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






33. An IPO that has met certain






34. 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.






35. 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






36. 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






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






38. 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






39. 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.).






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






41. 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






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






43. The rate of return or profit that an investment is expected to earn.






44. 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






45. The way you buy stock






46. Compound internal rate of return.






47. Cannot get other outside investors-No Shop






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






49. 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






50. Term sheet for equity offering