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Venture Capital

Subject : industries
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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.

2. 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.

3. 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

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

5. 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

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

7. 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) ...

8. 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

9. 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

10. Don't talk to the market about the company

11. 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

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

13. The residual ownership in a company like a corporation or LLC 51%=control

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

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

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

17. The equity ownership in a corporation. Also has basic voting rights

18. 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

19. 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.

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

21. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.

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

23. 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.

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

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

26. 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

27. 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

28. 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

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

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

31. 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

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

33. 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.

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

35. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity

36. 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

37. 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

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

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

40. 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

41. 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.

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

43. How you get out

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

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

46. 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.

47. Term sheet for equity offering

48. 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

49. 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.).

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