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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. 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
Pre-Money Valuation
IPO (Initial Public Offering)
series a preferred stock
bridge loans
2. 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
General Partner (GP)
Post-Money Valuation
Stock Price Agreement
Preferred Stock
3. The company or entity into which a fund invests directly.
Common Stock
portfolio compaay
No Shop/Confidentiality
Market Capitalization
4. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
going private
Liquidity Event
equity offerings
Common Stock
5. 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.
Closing
Common Stock
private equity
syndication
6. This refers to obtaining capital from investors or venture capital sources.
Adjusted Book Value
fund of funds
raising capital
Dividends
7. 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
Restricted Shares
management buy-in (MBI)
series a preferred stock
Capital
8. 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
Liquidation Preference
IPO(initial public offerings)
Restricted Shares
secondary purchase
9. 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
equity offerings
portfolio compaay
Common Stock
10. 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
secondary purchase
due diligence
Series A Preferred Stock
Confidentiality
11. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Venture Capitalist
Anti-Dilution Protections
return on investment (ROI)
capital gain
12. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Burn Rate
Common Equity
Due Diligence
mezzanine financing
13. The way you buy stock
exit
Capital Commitment
Pre-Money Valuation
PPM
14. 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
secondary purchase
Pre-Money Valuation
IPO (Initial Public Offering)
NDA (Non-disclosure agreement)
15. The total value of the company immediately prior to the latest round of financing
executive summary
Conversion Rights
Equity
Pre-money valuation
16. 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
Business Plan
Market Capitalization
Capitalization Table
going private
17. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
debt financing
Pre-money valuation
secondary purchase
18. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
due diligence
Pre-Money Valuation
Adjusted Book Value
Due Diligence
19. 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.
Due Diligence
equity offerings
lock-up period
Book Value
20. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
PPM
Pre-Money Valuation
Due Diligence
21. 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.
Preferred Stock
IPO(initial public offerings)
Venture Capital Financing
Restricted Shares
22. Cannot get other outside investors-No Shop
executive summary
Book Value
corporate venturing
No Shop/Confidentiality
23. 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.
seed capital
Warrants
mezzanine financing
Lead Investor
24. Pre-money valuation plus the amount invested in the latest round
Common Equity
Post-Money Valuation
leverage buy-out(LBO)
Post-money
25. How you get out
Liquidation Preference
Limited Partner
portfolio compaay
Private Equity
26. 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
Liquidation Preference
Lead Investor
Venture Capitalist
IPO(initial public offerings)
27. 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.
exit
secondary public offering
Capitalization Table
term sheet
28. No double tax - Limited number of investors
return on investment (ROI)
PPM
S Corporation
Bootstrapping
29. 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.
IPO(initial public offerings)
term sheet
Deal Structure
Closing
30. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
secondary public offering
exit
NDA (Non-disclosure agreement)
31. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Outstanding Stock
portfolio compaay
Elevator Pitch
32. The rate at which a company expends net cash over a certain period - usually a month.
Business Summary
Burn Rate
capital under management
IPO (Initial Public Offering)
33. The practice of a large company taking a minority equity position in a smaller company in a related field.
Limited Partner
Seed Money
corporate venturing
venture capital
34. The rate of return or profit that an investment is expected to earn.
term sheet
Internal Rate of Return
Pre-money valuation
S Corporation
35. 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
debt financing
acquisition
Restricted Shares
Liquidation Preference
36. 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
Common Stock
Capital Commitment
Preferred Stock
bridge loans
37. 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
Lead Investor
private equity
Series A Preferred Stock
38. Don't talk to the market about the company
Confidentiality
Corporation (Limited liability and taxation)
Pre-Money Valuation
PPM
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
Outstanding Stock
syndication
Bootstrapping
Conversion Rights
40. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Angel Financing
Corporation (Limited liability and taxation)
C Corporation
Market Capitalization
41. An investment vehicle designed to invest in a diversified group of investment funds.
Seed Money
fund of funds
equity financing
Preferred Stock
42. 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.
Term Sheet
Preferred Stock
Membership Interest
Restricted Stock
43. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
raising capital
exit
Angel Financing
executive summary
44. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
raising capital
Subordinated Debt
Restricted Shares
Qualified IPO
45. 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
exit
Venture Capitalist
Closing
Capitalization Table
46. Compound internal rate of return.
capital under management
Capitalization Table
IRR
buyout
47. 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.).
No Shop/Confidentiality
institutional investors
small business investment companies (SBIC)
Preferred Stock
48. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public
Anti-Dilution Protections
Restricted Stock
Market Capitalization
IPO (Initial Public Offering)
49. This refers to a synopsis of the key points of a business plan.
private equity
executive summary
Bootstrapping
Deal Structure
50. 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 -
benchmarks
acquisition
liquidation
limited partnerships