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 method by which an investor will realize an investment.






2. 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






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






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






5. 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.






6. 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






7. How you get to vote






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






9. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






10. 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






11. 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






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






13. 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






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






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






16. 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.






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






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






19. 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.






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






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






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






23. 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






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






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






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






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






28. 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.






29. 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






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






31. 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






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






33. 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






34. 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






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






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






37. 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.






38. Compound internal rate of return.






39. 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.






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






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 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






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






44. 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.






45. 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.






46. 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






47. An IPO that has met certain






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






49. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






50. How much the company is worth before an investment