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






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






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






4. 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.






5. A security with limits on its transferability. Usually issued in connection with a private placement






6. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






7. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






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






9. Compound internal rate of return.






10. 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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11. 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






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






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






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






15. 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






16. Cannot get other outside investors-No Shop






17. 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






18. 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






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






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






21. 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






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






23. 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.






24. How you get to vote






25. The total value of the company immediately prior to the latest round of financing






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






27. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






28. 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.






29. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






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






31. 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






32. The method by which an investor will realize an investment.






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






34. 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






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






36. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






37. 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






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






39. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






40. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






41. 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.






42. 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






43. 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.






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






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






46. 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.






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






48. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






49. An IPO that has met certain






50. 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