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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. 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
Adjusted Book Value
mezzanine financing
Bootstrapping
2. 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
Capital Commitment
Restricted Shares
minority enterprise small business investment companies (MESBICS)
seed capital
3. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi
Capital Call 'Drawdown'
benchmarks
Bootstrapping
Capital
4. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Subordinated Debt
Adjusted Book Value
executive summary
Common Equity
5. 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.
Term Sheet
turnaround
Seed Money
liquidation
6. 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
lock-up period
S Corporation
Term Sheet
Capitalization Table
7. 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
portfolio compaay
term sheet
Membership Interest
8. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
follow-on
Common Stock
Capital Commitment
9. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Elevator Pitch
Warrants
Cash-out election
10. How you get to vote
management buy-in (MBI)
corporate venturing
lead investor
Voting Rights
11. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Book Value
Membership Interest
Pre-Money Valuation
Angel Financing
12. 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
equity offerings
Private Equity
Lead Investor
Market Capitalization
13. 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)
debt financing
Pre-Money Valuation
Anti-Dilution Protections
14. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
Elevator Pitch
benchmarks
Capital Commitment
15. 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.
Initial Public Offering
Liquidation Preference
Subordinated Debt
term sheet
16. 'I will buy stock at price we negotiate'
Confidentiality
Equity
acquisition
Stock Price Agreement
17. 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.
Limited Partnership Agreement
equity financing
Deal Structure
Senior Stock
18. Term sheet for equity offering
Term Sheet
Liquidation
debt financing
Private Equity
19. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
fund of funds
equity offerings
Common Stock
Senior Stock
20. 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.
General Partner (GP)
lock-up period
seed capital
going private
21. 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 -
No Shop/Confidentiality
limited partnerships
Deal Structure
institutional investors
22. 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
Conversion Rights
lead investor
Burn Rate
Liquidation Preference
23. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Common Equity
management buy-in (MBI)
Corporation (Limited liability and taxation)
Qualified IPO
24. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
debt financing
closing
Senior Stock
Business Summary
25. 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.).
acquisition
Elevator Pitch
institutional investors
debt financing
26. 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.
return on investment (ROI)
Bridge Financing
executive summary
Membership Interest
27. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Venture Capitalist
leverage buy-out(LBO)
limited partnerships
28. 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
Business Summary
syndication
series a preferred stock
executive summary
29. 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
Pre-Money Valuation
Membership Interest
bridge loans
Post-money
30. Pre-money valuation plus the amount invested in the latest round
minority enterprise small business investment companies (MESBICS)
C Corporation
due diligence
Post-money
31. 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.
Bootstrapping
Liquidation Preference
small business investment companies (SBIC)
Outstanding Stock
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
private equity
Capital Commitment
Business Plan
lead investor
33. 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
Seed Money
term sheet
Restricted Shares
Internal Rate of Return
34. The rate at which a company expends net cash over a certain period - usually a month.
Term Sheet
IPO(initial public offerings)
exit
Burn Rate
35. How you get out
capital gain
Cash-out election
Lead Investor
Liquidation Preference
36. The value at which an asset is carried on a balance sheet (the cost of the item)
Initial Public Offering
IPO (Initial Public Offering)
Book Value
Venture Capitalist
37. 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.
Common Equity
management buy-out (MBO)
bridge loans
Venture Capital Financing
38. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Warrants
Adjusted Book Value
Pre-money valuation
39. Cannot get other outside investors-No Shop
private equity
Liquidation Preference
Liquidity Event
No Shop/Confidentiality
40. 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
limited partnerships
benchmarks
Elevator Pitch
Common Stock
41. No double tax - Limited number of investors
small business investment companies (SBIC)
Cash-out election
S Corporation
liquidation
42. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
syndication
closing
management buy-out (MBO)
Pre-money valuation
43. 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.
Venture Capital Financing
seed capital
Initial Public Offering
Equity
44. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.
IPO (Initial Public Offering)
private investment in public equities (PIPE)
follow-on
management buy-in (MBI)
45. The practice of a large company taking a minority equity position in a smaller company in a related field.
Angel Financing
corporate venturing
Term Sheet
Lead Investor
46. 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
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47. 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
turnaround
acquisition
Preferred Stock
going private
48. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
buyout
leverage buy-out(LBO)
PPM
lock-up period
49. 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
Post-Money Valuation
Pre-money valuation
institutional investors
corporate venturing
50. Don't talk to the market about the company
buyout
Confidentiality
Dividends
Elevator Pitch