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






2. 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.






3. 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.






4. 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.






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






6. 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






7. 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






8. 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.






9. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






10. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






11. 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.).






12. 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






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






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






15. 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.






16. The rate at which a company expends net cash over a certain period - usually a month.






17. The company or entity into which a fund invests directly.






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






19. 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.






20. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






22. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






23. 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






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






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






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






27. 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






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






29. 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






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






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






32. 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.






33. Cannot get other outside investors-No Shop






34. 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






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






36. 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.






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






38. The amount of this available to a management team for venture investments.






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






40. 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






41. 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






42. The internal rate of return on an investment.






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






44. 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






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






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






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






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






49. 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






50. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet