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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 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






2. The amount of this available to a management team for venture investments.






3. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






4. Term sheet for equity offering






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






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






7. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






8. The value at which an asset is carried on a balance sheet (the cost of the item)






9. A security with limits on its transferability. Usually issued in connection with a private placement






10. 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






11. Selling an interest in your business to an outside party to raise money.






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






13. 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.






14. 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






15. 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






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






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






18. The party that manages a limited partnership and is liable for the debts of the company






19. 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






20. Assets are subject to double taxation - Unlimited number of investors






21. 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.






22. 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.






23. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






25. 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.






26. 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






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






28. A business owned by stockholders who share in its profits but are not personally responsible for its debts






29. 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.






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






31. 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






32. 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) ...






33. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






34. 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






35. 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.






36. Cannot get other outside investors-No Shop






37. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






38. 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.






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






40. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






41. 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.






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






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






44. 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






45. 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






46. Pre-money valuation plus the amount invested in the latest round






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.).






48. No double tax - Limited number of investors






49. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






50. 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.