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






2. Term sheet for equity offering






3. 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






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






5. How you get out






6. 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






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






8. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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






10. 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.






11. 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






12. 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.






13. 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






14. Cannot get other outside investors-No Shop






15. The way you buy stock






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






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






18. 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.






19. 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.






20. 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.






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. 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


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






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






25. 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.






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






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






28. 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






29. 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.






30. 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) ...






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






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






33. 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






34. 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.






35. 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






36. 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






37. 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






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






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






40. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






41. 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






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






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






45. 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.






46. 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.






47. 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






48. No double tax - Limited number of investors






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






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