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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. 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
Preferred Stock
benchmarks
equity offerings
Internal Rate of Return
2. 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
executive summary
Series A Preferred Stock
management buy-out (MBO)
exit route
3. 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.
Preferred Stock
IPO(initial public offerings)
equity offerings
Dividends
4. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
liquidation
Venture Capital Financing
Voting Rights
NDA (Non-disclosure agreement)
5. The practice of a large company taking a minority equity position in a smaller company in a related field.
buyout
corporate venturing
capital under management
institutional investors
6. 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.
bridge loans
Equity
lead investor
Deal Structure
7. Investments by a private equity fund in a publicly traded company - usually at a discount.
Lead Investor
Angel Financing
Pre-Money Valuation
private investment in public equities (PIPE)
8. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Preferred Stock
Pre-Money Valuation
Limited Partnership Agreement
Liquidation
9. The residual ownership in a company like a corporation or LLC 51%=control
Elevator Pitch
Equity
Restricted Stock
Limited Partner
10. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
Initial Public Offering
liquidation
Capital Call 'Drawdown'
11. Document between general and limited partnership of each fund spells out details of the partnership.
Book Value
Limited Partnership Agreement
Due Diligence
Seed Money
12. 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
institutional investors
Post-money
Elevator Pitch
Deal Structure
13. This refers to obtaining capital from investors or venture capital sources.
raising capital
Conversion Rights
limited partnerships
turnaround
14. Selling an interest in your business to an outside party to raise money.
lead investor
Venture Capital Financing
Dividends
equity financing
15. 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.
Venture Capital Financing
Deal Structure
liquidation
recapitalization
16. Date the LP's subscription is effective and they become partner
Lead Investor
Closing
Post-Money Valuation
Capital
17. The equity ownership in a corporation. Also has basic voting rights
Bootstrapping
Common Stock
Pre-money valuation
Term Sheet
18. 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
equity financing
Venture Capital Financing
Business Plan
private equity
19. 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) ...
Series A Preferred Stock
Liquidity Event
Book Value
Initial Public Offering
20. 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
Private Equity
limited partnerships
portfolio compaay
capital gain
21. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
private equity
lead investor
acquisition
22. 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
private equity
debt financing
series a preferred stock
PPM
23. 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
Deal Structure
term sheet
Pre-Money Valuation
benchmarks
24. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
minority enterprise small business investment companies (MESBICS)
secondary public offering
recapitalization
25. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
Angel Financing
Pre-Money Valuation
Term Sheet
26. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment
27. 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.
Venture Capitalist
raising capital
management buy-out (MBO)
Common Stock
28. Letter of intent summarizing the key legal and financial terms
secondary purchase
Limited Partner
Term Sheet
small business investment companies (SBIC)
29. 'I will buy stock at price we negotiate'
capital under management
capital gain
closing
Stock Price Agreement
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Common Equity
private investment in public equities (PIPE)
Preferred Stock
31. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Dividends
Book Value
management buy-out (MBO)
32. 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
Capitalization Table
Capital Commitment
equity financing
Term Sheet
33. 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.
Pre-Money Valuation
closing
Bridge Financing
Qualified IPO
34. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation
lead investor
Limited Partnership Agreement
Dividends
Capital
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.
Common Stock
Bootstrapping
portfolio compaay
Lead Investor
36. 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
Common Stock
Lead Investor
capital under management
going private
37. A study of the background and financial reliability of the company - management team and industry.
Cash-out election
Due Diligence
Voting Rights
Liquidation Preference
38. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Limited Partner
liquidation
Preferred Stock
buyout
39. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Pre-Money Valuation
Initial Public Offering
secondary purchase
management buy-in (MBI)
40. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Business Plan
raising capital
Liquidation Preference
41. Assets are subject to double taxation - Unlimited number of investors
Pre-money valuation
private equity
C Corporation
General Partner (GP)
42. Don't talk to the market about the company
Confidentiality
Liquidation Preference
Limited Partnership Agreement
exit route
43. 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
IPO(initial public offerings)
Common Stock
leverage buy-out(LBO)
benchmarks
44. 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
S Corporation
Stock Price Agreement
secondary purchase
45. The amount of this available to a management team for venture investments.
capital under management
IPO (Initial Public Offering)
Elevator Pitch
private investment in public equities (PIPE)
46. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
closing
due diligence
Market Capitalization
syndication
47. 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
Market Capitalization
secondary public offering
Qualified IPO
Internal Rate of Return
48. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Restricted Stock
Book Value
Cash-out election
closing
49. 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
raising capital
venture capital
Preferred Stock
Initial Public Offering
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
NDA (Non-disclosure agreement)
Post-Money Valuation
Restricted Stock
Bootstrapping