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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. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Private Equity
equity financing
seed capital
Subordinated Debt
2. The company or entity into which a fund invests directly.
institutional investors
Pre-Money Valuation
Qualified IPO
portfolio compaay
3. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Confidentiality
capital gain
Bootstrapping
Liquidation Preference
4. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
secondary public offering
Business Plan
leverage buy-out(LBO)
due diligence
5. 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
PPM
Dividends
benchmarks
6. Term sheet for equity offering
Term Sheet
management buy-out (MBO)
Capital Call 'Drawdown'
institutional investors
7. 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.
S Corporation
lock-up period
Preferred Stock
secondary public offering
8. 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
turnaround
return on investment (ROI)
Restricted Shares
venture capital
9. An investment vehicle designed to invest in a diversified group of investment funds.
Capital Commitment
fund of funds
turnaround
Angel Financing
10. 'I will buy stock at price we negotiate'
Outstanding Stock
Pre-Money Valuation
Stock Price Agreement
follow-on
11. The way you buy stock
Angel Financing
PPM
IRR
IPO(initial public offerings)
12. 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
Market Capitalization
liquidation
limited partnerships
Business Plan
13. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
liquidation
Capital
capital gain
Preferred Stock
14. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Preferred Stock
limited partnerships
Angel Financing
Pre-money valuation
15. The amount of this available to a management team for venture investments.
capital under management
Restricted Shares
due diligence
Capitalization Table
16. 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
PPM
private equity
closing
going private
17. Pre-money valuation plus the amount invested in the latest round
Common Stock
venture capital
Post-money
IRR
18. 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
Lead Investor
Adjusted Book Value
Market Capitalization
Confidentiality
19. 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
turnaround
Post-money
Dividends
Limited Partner
20. Letter of intent summarizing the key legal and financial terms
Membership Interest
angel investors
Qualified IPO
Term Sheet
21. 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.
portfolio compaay
liquidation
turnaround
secondary public offering
22. 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.
Preferred Stock
Senior Stock
IPO (Initial Public Offering)
secondary purchase
23. 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.
buyout
mezzanine financing
Outstanding Stock
bridge loans
24. 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
No Shop/Confidentiality
Liquidation Preference
Preferred Stock
turnaround
25. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
seed capital
lock-up period
C Corporation
Common Equity
26. 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
small business investment companies (SBIC)
Series A Preferred Stock
Subordinated Debt
Lead Investor
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
Stock Price Agreement
bridge loans
liquidation
Angel Financing
28. Cannot get other outside investors-No Shop
turnaround
No Shop/Confidentiality
Venture Capital Financing
capital under management
29. 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
going private
Pre-Money Valuation
Bootstrapping
30. The rate at which a company expends net cash over a certain period - usually a month.
Liquidity Event
Burn Rate
equity offerings
acquisition
31. 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
syndication
Burn Rate
Limited Partner
32. 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
capital under management
benchmarks
Preferred Stock
Private Equity
33. 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
Capitalization Table
Equity
bridge loans
Closing
34. 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
IPO(initial public offerings)
Post-Money Valuation
venture capital
corporate venturing
35. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
series a preferred stock
Warrants
Outstanding Stock
36. Issue of shares of a company to the public by the company (directly) for the first time.
Business Summary
IPO(initial public offerings)
secondary purchase
Preferred Stock
37. 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.
Voting Rights
Preferred Stock
mezzanine financing
secondary public offering
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
Anti-Dilution Protections
raising capital
Business Summary
Seed Money
39. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Senior Stock
Business Summary
closing
40. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
Senior Stock
secondary purchase
Bootstrapping
41. The residual ownership in a company like a corporation or LLC 51%=control
NDA (Non-disclosure agreement)
Stock Price Agreement
raising capital
Equity
42. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Liquidation Preference
series a preferred stock
Closing
buyout
43. 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.
Restricted Shares
Dividends
liquidation
portfolio compaay
44. 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.).
Limited Partnership Agreement
Bootstrapping
institutional investors
Preferred Stock
45. Compound internal rate of return.
Dividends
Book Value
IRR
leverage buy-out(LBO)
46. 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
acquisition
closing
Elevator Pitch
equity financing
47. 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
Preferred Stock
Post-money
Private Equity
Liquidation Preference
48. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Warrants
Term Sheet
Senior Stock
equity financing
49. 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.
acquisition
Market Capitalization
Liquidation Preference
follow-on
50. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
No Shop/Confidentiality
management buy-in (MBI)
secondary purchase
private investment in public equities (PIPE)