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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. 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






2. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






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






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






5. 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






6. 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






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






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






9. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






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






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






12. Cannot get other outside investors-No Shop






13. 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.






14. 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.






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






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






17. 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






18. 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






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






20. 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






21. 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






22. How you get to vote






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






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






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






26. 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






27. 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






28. 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






29. 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






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






31. 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






32. The internal rate of return on an investment.






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






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






35. The party that manages a limited partnership and is liable for the debts of the company






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






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






38. 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


39. The way you buy stock






40. 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.






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






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






43. 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






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






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






46. 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.






47. 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.






48. 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.






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






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