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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. 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.
minority enterprise small business investment companies (MESBICS)
closing
secondary purchase
exit
2. A study of the background and financial reliability of the company - management team and industry.
debt financing
equity offerings
Due Diligence
angel investors
3. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
benchmarks
acquisition
IRR
4. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
bridge loans
portfolio compaay
Post-money
capital gain
5. 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
portfolio compaay
secondary public offering
Capital Commitment
6. Letter of intent summarizing the key legal and financial terms
Term Sheet
Restricted Stock
Book Value
benchmarks
7. 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
syndication
closing
Market Capitalization
Pre-Money Valuation
8. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
Warrants
capital under management
management buy-in (MBI)
9. 'I will buy stock at price we negotiate'
closing
Seed Money
Stock Price Agreement
capital gain
10. The method by which an investor will realize an investment.
exit route
going private
Business Plan
NDA (Non-disclosure agreement)
11. 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
Burn Rate
Business Summary
debt financing
small business investment companies (SBIC)
12. 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.
management buy-in (MBI)
limited partnerships
Venture Capital Financing
exit
13. Pre-money valuation plus the amount invested in the latest round
Initial Public Offering
mezzanine financing
syndication
Post-money
14. The maximum amount of cash that a partner is required to contribute under the terms
Business Plan
Warrants
No Shop/Confidentiality
Capital Commitment
15. 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.
executive summary
Limited Partner
private equity
liquidation
16. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
syndication
Business Summary
Outstanding Stock
secondary public offering
17. 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.
raising capital
buyout
follow-on
mezzanine financing
18. 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
Dividends
Liquidation
Liquidity Event
Post-Money Valuation
19. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Preferred Stock
Common Equity
management buy-out (MBO)
Capital
20. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Preferred Stock
secondary public offering
Voting Rights
angel investors
21. Issue of shares of a company to the public by the company (directly) for the first time.
Bridge Financing
IPO(initial public offerings)
Venture Capitalist
Adjusted Book Value
22. Compound internal rate of return.
Post-money
Term Sheet
angel investors
IRR
23. How you get out
Liquidity Event
Liquidation Preference
venture capital
Pre-money valuation
24. Investments by a private equity fund in a publicly traded company - usually at a discount.
Adjusted Book Value
Series A Preferred Stock
Senior Stock
private investment in public equities (PIPE)
25. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Lead Investor
Equity
Anti-Dilution Protections
Internal Rate of Return
26. How much the company is worth before an investment
venture capital
Pre-Money Valuation
Voting Rights
Liquidation Preference
27. Selling an interest in your business to an outside party to raise money.
syndication
Pre-Money Valuation
equity financing
IPO(initial public offerings)
28. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
angel investors
Capitalization Table
recapitalization
leverage buy-out(LBO)
29. Term sheet for equity offering
Term Sheet
IPO (Initial Public Offering)
Common Stock
lock-up period
30. 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
angel investors
Liquidation Preference
capital under management
Post-Money Valuation
31. 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
Common Equity
PPM
Limited Partner
Business Plan
32. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Limited Partnership Agreement
capital gain
management buy-in (MBI)
Liquidity Event
33. The amount of this available to a management team for venture investments.
Common Equity
Internal Rate of Return
capital under management
Business Summary
34. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
going private
Capital
Subordinated Debt
PPM
35. The value at which an asset is carried on a balance sheet (the cost of the item)
Equity
management buy-in (MBI)
leverage buy-out(LBO)
Book Value
36. The party that manages a limited partnership and is liable for the debts of the company
exit route
General Partner (GP)
Initial Public Offering
due diligence
37. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Seed Money
Warrants
Corporation (Limited liability and taxation)
capital under management
38. 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
institutional investors
Pre-Money Valuation
benchmarks
S Corporation
39. 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
IRR
benchmarks
Burn Rate
Common Stock
40. Date the LP's subscription is effective and they become partner
Common Equity
Closing
series a preferred stock
IPO (Initial Public Offering)
41. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Liquidity Event
Preferred Stock
Membership Interest
Series A Preferred Stock
42. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Post-Money Valuation
buyout
Burn Rate
return on investment (ROI)
43. Don't talk to the market about the company
capital under management
management buy-out (MBO)
Burn Rate
Confidentiality
44. Cannot get other outside investors-No Shop
management buy-in (MBI)
No Shop/Confidentiality
Seed Money
follow-on
45. How you get to vote
Burn Rate
syndication
Voting Rights
Term Sheet
46. This refers to a synopsis of the key points of a business plan.
small business investment companies (SBIC)
No Shop/Confidentiality
minority enterprise small business investment companies (MESBICS)
executive summary
47. 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
capital under management
minority enterprise small business investment companies (MESBICS)
debt financing
48. An investment vehicle designed to invest in a diversified group of investment funds.
exit route
Venture Capital Financing
acquisition
fund of funds
49. Document between general and limited partnership of each fund spells out details of the partnership.
return on investment (ROI)
Limited Partnership Agreement
secondary public offering
Common Equity
50. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
management buy-in (MBI)
Burn Rate
equity offerings
Post-Money Valuation