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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






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






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






4. 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






5. 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






6. How you get out






7. How much the company is worth before an investment






8. How you get to vote






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






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






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






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






13. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no






14. Term sheet for equity offering






15. 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.






16. The internal rate of return on an investment.






17. 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.






18. The way you buy stock






19. Cannot get other outside investors-No Shop






20. 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






21. 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






22. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






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






24. 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






25. Compound internal rate of return.






26. Don't talk to the market about the company






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. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c






29. 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.






30. 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.






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






32. 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






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






34. 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






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






36. 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






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






38. 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






39. 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


40. 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






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






42. 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






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






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






45. 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






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






47. 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.






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






49. 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






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