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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 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.
Book Value
liquidation
Term Sheet
Common Equity
2. This refers to obtaining capital from investors or venture capital sources.
raising capital
liquidation
Business Summary
leverage buy-out(LBO)
3. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s
Liquidation Preference
secondary public offering
Capitalization Table
Warrants
4. 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.
liquidation
Preferred Stock
institutional investors
General Partner (GP)
5. 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
capital gain
Outstanding Stock
venture capital
Dividends
6. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Due Diligence
Corporation (Limited liability and taxation)
Internal Rate of Return
C Corporation
7. 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
secondary purchase
S Corporation
IPO (Initial Public Offering)
Deal Structure
8. Pre-money valuation plus the amount invested in the latest round
Post-money
Common Stock
Outstanding Stock
lead investor
9. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Pre-Money Valuation
capital gain
fund of funds
10. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell
Warrants
small business investment companies (SBIC)
Private Equity
Common Stock
11. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Capital
capital gain
Burn Rate
Business Summary
12. 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
Business Summary
bridge loans
Anti-Dilution Protections
private investment in public equities (PIPE)
13. How much the company is worth before an investment
Deal Structure
Preferred Stock
IPO(initial public offerings)
Pre-Money Valuation
14. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Book Value
closing
Dividends
Business Summary
15. 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.
Post-Money Valuation
Internal Rate of Return
Capitalization Table
turnaround
16. 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 -
limited partnerships
Capital Call 'Drawdown'
Burn Rate
capital under management
17. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Closing
Equity
equity offerings
Post-money
18. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Internal Rate of Return
Warrants
recapitalization
Subordinated Debt
19. 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.
Qualified IPO
secondary public offering
Elevator Pitch
Liquidation Preference
20. 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.
syndication
Book Value
Business Plan
term sheet
21. 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
NDA (Non-disclosure agreement)
Business Plan
Liquidation Preference
IRR
22. The residual ownership in a company like a corporation or LLC 51%=control
Venture Capital Financing
Pre-money valuation
Equity
IRR
23. 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
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24. 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.
Due Diligence
syndication
Capitalization Table
going private
25. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares
lead investor
Restricted Stock
Restricted Shares
Conversion Rights
26. 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.
mezzanine financing
General Partner (GP)
private equity
Deal Structure
27. 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.
Confidentiality
secondary public offering
IRR
follow-on
28. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
private investment in public equities (PIPE)
recapitalization
Angel Financing
acquisition
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
Venture Capitalist
Pre-money valuation
Limited Partner
going private
30. The value at which an asset is carried on a balance sheet (the cost of the item)
Voting Rights
Book Value
Common Stock
Stock Price Agreement
31. 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
Bootstrapping
Elevator Pitch
Limited Partnership Agreement
Book Value
32. 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
Private Equity
Adjusted Book Value
benchmarks
Equity
33. 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
Adjusted Book Value
venture capital
Post-Money Valuation
Capital Call 'Drawdown'
34. 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-out (MBO)
series a preferred stock
syndication
Post-Money Valuation
35. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
venture capital
buyout
Liquidation
acquisition
36. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
benchmarks
General Partner (GP)
Common Stock
37. 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.
Liquidation Preference
IRR
Venture Capitalist
minority enterprise small business investment companies (MESBICS)
38. 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
Preferred Stock
going private
private equity
venture capital
39. 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
small business investment companies (SBIC)
Stock Price Agreement
management buy-out (MBO)
C Corporation
40. 'I will buy stock at price we negotiate'
Stock Price Agreement
Dividends
lock-up period
Business Plan
41. An IPO that has met certain
angel investors
corporate venturing
Qualified IPO
NDA (Non-disclosure agreement)
42. The practice of a large company taking a minority equity position in a smaller company in a related field.
Angel Financing
No Shop/Confidentiality
Preferred Stock
corporate venturing
43. 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.
Stock Price Agreement
secondary purchase
Bridge Financing
capital gain
44. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Burn Rate
capital under management
capital gain
Liquidity Event
45. 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
angel investors
follow-on
Capitalization Table
46. 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.
recapitalization
Book Value
executive summary
NDA (Non-disclosure agreement)
47. 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
Post-Money Valuation
Private Equity
secondary purchase
48. The amount of this available to a management team for venture investments.
Corporation (Limited liability and taxation)
Stock Price Agreement
Limited Partnership Agreement
capital under management
49. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Voting Rights
Adjusted Book Value
Angel Financing
Market Capitalization
50. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
private investment in public equities (PIPE)
Limited Partnership Agreement
series a preferred stock