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. 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.






2. How you get out






3. 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






4. 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.






5. 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.






6. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






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






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






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






11. 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.






12. 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.






13. 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






14. 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






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






16. 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






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






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






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






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






21. 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.






22. 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






23. 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.






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






25. 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






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






27. 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






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






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






30. 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






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






32. 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.






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






34. The internal rate of return on an investment.






35. An IPO that has met certain






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






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






38. 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






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






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






41. 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






42. 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






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






44. This refers to obtaining capital from investors or venture capital sources.






45. 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






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






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






48. 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.






49. 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.






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