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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. The company or entity into which a fund invests directly.
Equity
Bridge Financing
secondary public offering
portfolio compaay
2. How you get to vote
venture capital
IPO (Initial Public Offering)
Voting Rights
seed capital
3. The residual ownership in a company like a corporation or LLC 51%=control
Seed Money
Equity
No Shop/Confidentiality
recapitalization
4. 'I will buy stock at price we negotiate'
Limited Partnership Agreement
Stock Price Agreement
Outstanding Stock
buyout
5. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
series a preferred stock
leverage buy-out(LBO)
Voting Rights
equity offerings
6. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
portfolio compaay
Capital Call 'Drawdown'
Voting Rights
due diligence
7. An investment vehicle designed to invest in a diversified group of investment funds.
Internal Rate of Return
secondary public offering
venture capital
fund of funds
8. 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.
Common Stock
Liquidation Preference
lead investor
Bridge Financing
9. 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
portfolio compaay
management buy-in (MBI)
Term Sheet
Capitalization Table
10. 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
venture capital
Membership Interest
small business investment companies (SBIC)
closing
11. The rate at which a company expends net cash over a certain period - usually a month.
Limited Partner
Burn Rate
recapitalization
turnaround
12. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Liquidity Event
angel investors
IPO (Initial Public Offering)
Pre-Money Valuation
13. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet
Restricted Stock
acquisition
Cash-out election
small business investment companies (SBIC)
14. Investments by a private equity fund in a publicly traded company - usually at a discount.
Series A Preferred Stock
recapitalization
private investment in public equities (PIPE)
IPO (Initial Public Offering)
15. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Common Stock
Post-money
mezzanine financing
Membership Interest
16. 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
Pre-money valuation
seed capital
Membership Interest
Common Stock
17. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
recapitalization
Post-Money Valuation
buyout
18. 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.
Anti-Dilution Protections
raising capital
No Shop/Confidentiality
Deal Structure
19. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Adjusted Book Value
Seed Money
C Corporation
Conversion Rights
20. This refers to obtaining capital from investors or venture capital sources.
Outstanding Stock
raising capital
capital under management
Senior Stock
21. 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.
Cash-out election
Adjusted Book Value
Preferred Stock
lock-up period
22. 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.
IRR
follow-on
Preferred Stock
return on investment (ROI)
23. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
minority enterprise small business investment companies (MESBICS)
due diligence
Private Equity
24. The way you buy stock
secondary purchase
limited partnerships
PPM
acquisition
25. 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
Elevator Pitch
closing
equity financing
26. How much the company is worth before an investment
Cash-out election
Post-Money Valuation
Preferred Stock
Pre-Money Valuation
27. The internal rate of return on an investment.
Anti-Dilution Protections
Market Capitalization
institutional investors
return on investment (ROI)
28. 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
General Partner (GP)
Restricted Shares
debt financing
Common Stock
29. 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
series a preferred stock
exit route
Stock Price Agreement
Elevator Pitch
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
minority enterprise small business investment companies (MESBICS)
Business Summary
Capital
Venture Capital Financing
31. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Common Stock
S Corporation
secondary purchase
minority enterprise small business investment companies (MESBICS)
32. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Due Diligence
closing
Conversion Rights
33. 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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34. 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
Capitalization Table
No Shop/Confidentiality
corporate venturing
35. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Outstanding Stock
Due Diligence
Warrants
36. 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
return on investment (ROI)
going private
General Partner (GP)
37. 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
Preferred Stock
Capital
Business Plan
Pre-Money Valuation
38. Issue of shares of a company to the public by the company (directly) for the first time.
venture capital
Subordinated Debt
seed capital
IPO(initial public offerings)
39. 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
lock-up period
benchmarks
Dividends
Anti-Dilution Protections
40. 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.
equity offerings
secondary public offering
Pre-money valuation
Outstanding Stock
41. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
management buy-in (MBI)
Liquidation Preference
General Partner (GP)
capital gain
42. 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
Qualified IPO
venture capital
Capital Commitment
Dividends
43. 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.
liquidation
management buy-out (MBO)
Business Summary
Bootstrapping
44. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
turnaround
Common Stock
recapitalization
45. 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.
corporate venturing
portfolio compaay
S Corporation
Bridge Financing
46. 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) ...
Stock Price Agreement
Initial Public Offering
management buy-in (MBI)
Cash-out election
47. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
C Corporation
Subordinated Debt
benchmarks
Warrants
48. Don't talk to the market about the company
Restricted Shares
Confidentiality
Term Sheet
benchmarks
49. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
PPM
private equity
exit route
50. 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
Series A Preferred Stock
debt financing
lock-up period
management buy-in (MBI)