SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
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. How much the company is worth before an investment
institutional investors
Stock Price Agreement
Term Sheet
Pre-Money Valuation
2. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Dividends
Preferred Stock
follow-on
Angel Financing
3. 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.
mezzanine financing
executive summary
Venture Capital Financing
Private Equity
4. The method by which an investor will realize an investment.
capital gain
Corporation (Limited liability and taxation)
exit route
return on investment (ROI)
5. 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.
lock-up period
Liquidity Event
Confidentiality
mezzanine financing
6. A study of the background and financial reliability of the company - management team and industry.
lock-up period
small business investment companies (SBIC)
Due Diligence
IPO (Initial Public Offering)
7. An IPO that has met certain
Qualified IPO
Anti-Dilution Protections
Corporation (Limited liability and taxation)
Membership Interest
8. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
bridge loans
Internal Rate of Return
Pre-money valuation
9. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Business Summary
executive summary
Venture Capitalist
10. 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.
recapitalization
equity offerings
Liquidation
Due Diligence
11. 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.
Restricted Stock
Capitalization Table
General Partner (GP)
secondary public offering
12. 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
Limited Partner
Initial Public Offering
leverage buy-out(LBO)
Confidentiality
13. 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.
bridge loans
fund of funds
turnaround
Burn Rate
14. 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
secondary purchase
Preferred Stock
seed capital
Seed Money
15. 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
raising capital
series a preferred stock
Common Equity
Cash-out election
16. Cannot get other outside investors-No Shop
executive summary
No Shop/Confidentiality
General Partner (GP)
buyout
17. Assets are subject to double taxation - Unlimited number of investors
small business investment companies (SBIC)
C Corporation
limited partnerships
bridge loans
18. 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
Preferred Stock
Anti-Dilution Protections
minority enterprise small business investment companies (MESBICS)
institutional investors
19. A security with limits on its transferability. Usually issued in connection with a private placement
secondary public offering
Pre-Money Valuation
Restricted Stock
acquisition
20. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
series a preferred stock
private investment in public equities (PIPE)
Term Sheet
Anti-Dilution Protections
21. The maximum amount of cash that a partner is required to contribute under the terms
Dividends
Capital Commitment
Conversion Rights
management buy-in (MBI)
22. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
equity offerings
Equity
Seed Money
23. How you get to vote
Voting Rights
turnaround
term sheet
series a preferred stock
24. 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.
lead investor
bridge loans
Liquidity Event
mezzanine financing
25. 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
small business investment companies (SBIC)
Subordinated Debt
lock-up period
Private Equity
26. The value at which an asset is carried on a balance sheet (the cost of the item)
Stock Price Agreement
Membership Interest
lead investor
Book Value
27. The total value of the company immediately prior to the latest round of financing
Liquidation Preference
Closing
Pre-money valuation
Common Stock
28. 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)
executive summary
Market Capitalization
Common Stock
29. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
angel investors
Restricted Stock
Venture Capital Financing
30. The practice of a large company taking a minority equity position in a smaller company in a related field.
exit
Angel Financing
Common Stock
corporate venturing
31. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Due Diligence
Pre-money valuation
recapitalization
32. 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
Capital Commitment
private equity
Capital
C Corporation
33. 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
C Corporation
debt financing
closing
Membership Interest
34. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
debt financing
Closing
Post-money
35. 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
Cash-out election
Subordinated Debt
series a preferred stock
Preferred Stock
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
limited partnerships
Corporation (Limited liability and taxation)
Business Plan
Bridge Financing
37. 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
Warrants
limited partnerships
Common Stock
small business investment companies (SBIC)
38. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity financing
Pre-money valuation
equity offerings
follow-on
39. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Senior Stock
recapitalization
Conversion Rights
angel investors
40. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Cash-out election
Adjusted Book Value
Market Capitalization
Bridge Financing
41. The amount of this available to a management team for venture investments.
capital under management
Deal Structure
Dividends
IPO (Initial Public Offering)
42. 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
Lead Investor
Voting Rights
Conversion Rights
Liquidation
43. 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
Bridge Financing
Pre-Money Valuation
Liquidation
Term Sheet
44. 'I will buy stock at price we negotiate'
Liquidation Preference
venture capital
Series A Preferred Stock
Stock Price Agreement
45. Don't talk to the market about the company
Bootstrapping
Capital Call 'Drawdown'
Confidentiality
Capitalization Table
46. 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 -
leverage buy-out(LBO)
limited partnerships
Dividends
Preferred Stock
47. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
mezzanine financing
C Corporation
Business Summary
equity offerings
48. 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
lock-up period
Common Stock
Private Equity
limited partnerships
49. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Preferred Stock
capital under management
Conversion Rights
buyout
50. 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
management buy-out (MBO)
Capitalization Table
Post-Money Valuation
Subordinated Debt