Test your basic knowledge |

Venture Capital

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. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






2. A study of the background and financial reliability of the company - management team and industry.






3. 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






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






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






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






7. Issue of shares of a company to the public by the company (directly) for the first time.






8. The maximum amount of cash that a partner is required to contribute under the terms






9. How you get to vote






10. 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.






11. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






12. 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) ...






13. This refers to a synopsis of the key points of a business plan.






14. 'I will buy stock at price we negotiate'






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






16. 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.).






17. Letter of intent summarizing the key legal and financial terms






18. 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






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






20. 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 -






21. How you get out






22. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






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






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






25. Term sheet for equity offering






26. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






28. The rate of return or profit that an investment is expected to earn.






29. 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






30. Investments by a private equity fund in a publicly traded company - usually at a discount.






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






32. 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






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






34. Date the LP's subscription is effective and they become partner






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






36. An IPO that has met certain






37. 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






38. 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.






39. 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


40. 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






41. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






42. 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.






43. 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.






44. An investment vehicle designed to invest in a diversified group of investment funds.






45. 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.






46. 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






47. Document between general and limited partnership of each fund spells out details of the partnership.






48. 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.






49. 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.






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