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






2. 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.






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






4. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






6. 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 -






7. 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.






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






9. 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






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






11. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






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






13. 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.






14. 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.






15. 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.






16. 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






17. 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






18. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






19. Term sheet for equity offering






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






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






22. 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






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






24. No double tax - Limited number of investors






25. 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.






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






27. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






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






29. 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






30. The practice of a large company taking a minority equity position in a smaller company in a related field.






31. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






32. The way you buy stock






33. 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.






34. 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.






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.






36. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






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






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






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






40. 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






41. How you get to vote






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






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






44. 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.






45. 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






46. 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.).






47. 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






48. 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






49. 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






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