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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 party that manages a limited partnership and is liable for the debts of the company
Voting Rights
Capital Commitment
return on investment (ROI)
General Partner (GP)
2. The way you buy stock
Internal Rate of Return
Business Plan
PPM
private investment in public equities (PIPE)
3. 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.
syndication
Common Stock
Seed Money
Deal Structure
4. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Corporation (Limited liability and taxation)
secondary purchase
lock-up period
Voting Rights
5. The method by which an investor will realize an investment.
exit route
Business Plan
Common Stock
turnaround
6. 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
Liquidation Preference
Capital Call 'Drawdown'
seed capital
7. This refers to obtaining capital from investors or venture capital sources.
benchmarks
Post-money
raising capital
Liquidation Preference
8. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
Stock Price Agreement
C Corporation
Membership Interest
9. Document between general and limited partnership of each fund spells out details of the partnership.
debt financing
Pre-Money Valuation
Limited Partnership Agreement
Senior Stock
10. How you get to vote
follow-on
Voting Rights
Liquidation Preference
limited partnerships
11. 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
small business investment companies (SBIC)
seed capital
term sheet
exit route
12. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
series a preferred stock
Venture Capitalist
PPM
13. 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.
lock-up period
turnaround
Venture Capital Financing
Deal Structure
14. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
management buy-out (MBO)
Business Summary
Limited Partner
acquisition
15. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
Equity
Restricted Stock
IPO (Initial Public Offering)
angel investors
16. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
benchmarks
lock-up period
Membership Interest
Liquidation
17. An IPO that has met certain
going private
General Partner (GP)
Qualified IPO
Pre-Money Valuation
18. Cannot get other outside investors-No Shop
recapitalization
No Shop/Confidentiality
management buy-in (MBI)
Book Value
19. 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
Common Stock
private equity
IRR
executive summary
20. 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
Limited Partnership Agreement
liquidation
Bridge Financing
21. 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
Due Diligence
bridge loans
Capital Commitment
Preferred Stock
22. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Capital
Warrants
series a preferred stock
Adjusted Book Value
23. 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
benchmarks
Series A Preferred Stock
management buy-out (MBO)
Warrants
24. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
seed capital
lead investor
Senior Stock
Due Diligence
25. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
secondary public offering
Preferred Stock
Term Sheet
due diligence
26. No double tax - Limited number of investors
Bridge Financing
Common Stock
Liquidation Preference
S Corporation
27. 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
Preferred Stock
Seed Money
Due Diligence
bridge loans
28. Assets are subject to double taxation - Unlimited number of investors
acquisition
IRR
Capital Commitment
C Corporation
29. 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)
Deal Structure
exit
Bootstrapping
30. The company or entity into which a fund invests directly.
turnaround
portfolio compaay
Venture Capital Financing
Elevator Pitch
31. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Business Summary
Subordinated Debt
mezzanine financing
equity offerings
32. 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
Angel Financing
Elevator Pitch
follow-on
Common Stock
33. Don't talk to the market about the company
Preferred Stock
Equity
Confidentiality
capital under management
34. 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.
closing
Market Capitalization
Preferred Stock
Stock Price Agreement
35. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
syndication
term sheet
Venture Capital Financing
mezzanine financing
36. 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
leverage buy-out(LBO)
Preferred Stock
Market Capitalization
Business Summary
37. 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.
benchmarks
Angel Financing
liquidation
Outstanding Stock
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
mezzanine financing
benchmarks
Venture Capital Financing
Preferred Stock
39. 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) ...
lead investor
Stock Price Agreement
Subordinated Debt
Initial Public Offering
40. Pre-money valuation plus the amount invested in the latest round
Post-money
Venture Capitalist
turnaround
Anti-Dilution Protections
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.
Equity
Voting Rights
follow-on
due diligence
42. 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
Elevator Pitch
Restricted Shares
PPM
executive summary
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.
going private
Venture Capital Financing
Business Plan
Capitalization Table
44. Investments by a private equity fund in a publicly traded company - usually at a discount.
Business Plan
Initial Public Offering
debt financing
private investment in public equities (PIPE)
45. 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
Liquidation Preference
Limited Partnership Agreement
Initial Public Offering
Lead Investor
46. 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.
Pre-Money Valuation
syndication
exit
management buy-in (MBI)
47. 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
management buy-in (MBI)
due diligence
Corporation (Limited liability and taxation)
small business investment companies (SBIC)
48. 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.
management buy-in (MBI)
Stock Price Agreement
Equity
management buy-out (MBO)
49. 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
capital under management
Preferred Stock
closing
Cash-out election
50. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
going private
Liquidity Event
Membership Interest
institutional investors