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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. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Bootstrapping
Common Equity
Senior Stock
Limited Partner
2. This refers to a synopsis of the key points of a business plan.
management buy-in (MBI)
executive summary
fund of funds
Internal Rate of Return
3. 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.).
institutional investors
mezzanine financing
Subordinated Debt
Corporation (Limited liability and taxation)
4. This refers to obtaining capital from investors or venture capital sources.
raising capital
Book Value
Qualified IPO
private investment in public equities (PIPE)
5. 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 -
Elevator Pitch
S Corporation
No Shop/Confidentiality
limited partnerships
6. 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
leverage buy-out(LBO)
turnaround
Corporation (Limited liability and taxation)
Limited Partner
7. 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
bridge loans
Liquidation
raising capital
Restricted Stock
8. The residual ownership in a company like a corporation or LLC 51%=control
syndication
small business investment companies (SBIC)
Equity
Term Sheet
9. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public
Lead Investor
angel investors
seed capital
Market Capitalization
10. 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
General Partner (GP)
syndication
Anti-Dilution Protections
11. 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
Post-money
Common Equity
Preferred Stock
Liquidation Preference
12. Letter of intent summarizing the key legal and financial terms
Limited Partnership Agreement
Stock Price Agreement
debt financing
Term Sheet
13. 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.
recapitalization
series a preferred stock
mezzanine financing
equity financing
14. 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.
Term Sheet
Common Stock
secondary public offering
Market Capitalization
15. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Senior Stock
portfolio compaay
Anti-Dilution Protections
term sheet
16. 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
Series A Preferred Stock
bridge loans
private equity
Capital
17. The value at which an asset is carried on a balance sheet (the cost of the item)
Preferred Stock
Internal Rate of Return
Book Value
Business Summary
18. 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
series a preferred stock
term sheet
IPO (Initial Public Offering)
Common Stock
19. 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
Stock Price Agreement
Pre-Money Valuation
Common Stock
Lead Investor
20. The maximum amount of cash that a partner is required to contribute under the terms
Pre-money valuation
turnaround
Capital Commitment
S Corporation
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.
going private
management buy-out (MBO)
Elevator Pitch
lock-up period
22. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
follow-on
Conversion Rights
Bridge Financing
secondary purchase
23. The rate of return or profit that an investment is expected to earn.
Subordinated Debt
No Shop/Confidentiality
Internal Rate of Return
Preferred Stock
24. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the
IRR
angel investors
going private
equity offerings
25. The method by which an investor will realize an investment.
Confidentiality
exit route
Restricted Shares
equity financing
26. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Restricted Shares
corporate venturing
Restricted Stock
exit
27. No double tax - Limited number of investors
Cash-out election
Pre-money valuation
S Corporation
lead investor
28. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
Business Plan
seed capital
Private Equity
29. 'I will buy stock at price we negotiate'
bridge loans
Stock Price Agreement
seed capital
Equity
30. Issue of shares of a company to the public by the company (directly) for the first time.
Outstanding Stock
lead investor
IPO(initial public offerings)
leverage buy-out(LBO)
31. 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
Pre-Money Valuation
Limited Partner
Warrants
Venture Capitalist
32. 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
benchmarks
Elevator Pitch
secondary purchase
equity offerings
33. 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) ...
Dividends
NDA (Non-disclosure agreement)
minority enterprise small business investment companies (MESBICS)
Initial Public Offering
34. 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
bridge loans
Closing
Capitalization Table
private equity
35. How much the company is worth before an investment
lead investor
Limited Partner
exit route
Pre-Money Valuation
36. Date the LP's subscription is effective and they become partner
Conversion Rights
equity financing
private equity
Closing
37. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
closing
equity offerings
Seed Money
38. 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
minority enterprise small business investment companies (MESBICS)
Post-Money Valuation
Bootstrapping
recapitalization
39. 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.
Limited Partnership Agreement
Post-money
Bootstrapping
Post-Money Valuation
40. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Series A Preferred Stock
Angel Financing
Dividends
acquisition
41. An IPO that has met certain
Capital Commitment
General Partner (GP)
Qualified IPO
Pre-money valuation
42. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Senior Stock
executive summary
General Partner (GP)
43. 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.
lead investor
due diligence
going private
liquidation
44. Document between general and limited partnership of each fund spells out details of the partnership.
Initial Public Offering
debt financing
Limited Partnership Agreement
private investment in public equities (PIPE)
45. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Common Equity
Capital
Initial Public Offering
Subordinated Debt
46. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Subordinated Debt
recapitalization
Business Plan
Warrants
47. 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.
mezzanine financing
Burn Rate
turnaround
Book Value
48. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
acquisition
closing
Book Value
Dividends
49. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.
Restricted Shares
fund of funds
Outstanding Stock
follow-on
50. 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.
Market Capitalization
Lead Investor
secondary purchase
follow-on