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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 amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally
secondary purchase
Pre-money valuation
exit
Liquidation Preference
2. Don't talk to the market about the company
Post-money
corporate venturing
Common Equity
Confidentiality
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
venture capital
executive summary
exit route
return on investment (ROI)
4. Compound internal rate of return.
IRR
Post-Money Valuation
Pre-money valuation
closing
5. 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
buyout
venture capital
Pre-Money Valuation
6. 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
Internal Rate of Return
Venture Capital Financing
seed capital
return on investment (ROI)
7. 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
benchmarks
Subordinated Debt
Liquidation Preference
Elevator Pitch
8. The way you buy stock
Subordinated Debt
Angel Financing
capital under management
PPM
9. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
lead investor
Deal Structure
Angel Financing
10. No double tax - Limited number of investors
IPO(initial public offerings)
Pre-Money Valuation
Capital Commitment
S Corporation
11. 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.
debt financing
liquidation
lock-up period
Business Plan
12. 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.).
venture capital
Outstanding Stock
institutional investors
limited partnerships
13. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Warrants
Stock Price Agreement
equity offerings
management buy-in (MBI)
14. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
executive summary
Membership Interest
Book Value
IPO (Initial Public Offering)
15. 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.
Venture Capital Financing
Confidentiality
lead investor
exit
16. 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
Term Sheet
Subordinated Debt
NDA (Non-disclosure agreement)
Market Capitalization
17. 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
Limited Partner
Book Value
Venture Capital Financing
IPO(initial public offerings)
18. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Bootstrapping
seed capital
Corporation (Limited liability and taxation)
due diligence
19. How much the company is worth before an investment
secondary public offering
due diligence
Venture Capitalist
Pre-Money Valuation
20. 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.
S Corporation
C Corporation
Preferred Stock
IPO(initial public offerings)
21. 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
Venture Capitalist
Post-Money Valuation
Outstanding Stock
Venture Capital Financing
22. The equity ownership in a corporation. Also has basic voting rights
Capital Call 'Drawdown'
Senior Stock
Capitalization Table
Common Stock
23. 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
private investment in public equities (PIPE)
C Corporation
Preferred Stock
institutional investors
24. Term sheet for equity offering
going private
Term Sheet
Liquidity Event
Post-money
25. 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.
Post-Money Valuation
acquisition
exit
General Partner (GP)
26. An investment vehicle designed to invest in a diversified group of investment funds.
portfolio compaay
fund of funds
Dividends
secondary public offering
27. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Series A Preferred Stock
General Partner (GP)
Common Equity
recapitalization
28. 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.
bridge loans
Post-money
syndication
Capital
29. A security with limits on its transferability. Usually issued in connection with a private placement
liquidation
Capital Commitment
IPO (Initial Public Offering)
Restricted Stock
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
raising capital
Capital
Book Value
Pre-money valuation
31. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
Qualified IPO
Liquidity Event
executive summary
32. 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
equity financing
follow-on
lead investor
Business Plan
33. The rate at which a company expends net cash over a certain period - usually a month.
Dividends
syndication
Restricted Shares
Burn Rate
34. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
Preferred Stock
Outstanding Stock
Preferred Stock
35. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Restricted Shares
Dividends
capital gain
Business Plan
36. 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.
corporate venturing
Post-Money Valuation
private investment in public equities (PIPE)
minority enterprise small business investment companies (MESBICS)
37. 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
Common Stock
Business Summary
Outstanding Stock
Private Equity
38. Cannot get other outside investors-No Shop
Senior Stock
No Shop/Confidentiality
PPM
Adjusted Book Value
39. Investments by a private equity fund in a publicly traded company - usually at a discount.
Term Sheet
private investment in public equities (PIPE)
Internal Rate of Return
seed capital
40. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
portfolio compaay
Due Diligence
Seed Money
41. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
secondary public offering
Pre-Money Valuation
Business Summary
42. The rate of return or profit that an investment is expected to earn.
capital gain
private investment in public equities (PIPE)
Restricted Shares
Internal Rate of Return
43. 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
private equity
IPO(initial public offerings)
Qualified IPO
Capital Call 'Drawdown'
44. The maximum amount of cash that a partner is required to contribute under the terms
Common Equity
PPM
Capital Commitment
Liquidation
45. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Restricted Stock
small business investment companies (SBIC)
portfolio compaay
46. 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.
Angel Financing
liquidation
Term Sheet
follow-on
47. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
term sheet
Senior Stock
Conversion Rights
Common Stock
48. 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
secondary purchase
debt financing
IRR
Dividends
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.
management buy-in (MBI)
exit
mezzanine financing
venture capital
50. 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
return on investment (ROI)
IPO (Initial Public Offering)
NDA (Non-disclosure agreement)
Business Summary