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. 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






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






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






5. Cannot get other outside investors-No Shop






6. 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






7. 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.






8. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






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






10. 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






11. 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.






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






13. 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.






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






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






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






17. 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.






18. The internal rate of return on an investment.






19. 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






20. How you get to vote






21. 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.






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






23. 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






24. How much the company is worth before an investment






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






26. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation






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






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






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






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






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






32. 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.






33. The residual ownership in a company like a corporation or LLC 51%=control






34. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






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






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






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






38. 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






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.






40. 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






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






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






43. 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.).






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






45. 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






46. Selling an interest in your business to an outside party to raise money.






47. 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






48. 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






49. 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.






50. 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.