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Test your basic knowledge |
Venture Capital
Start Test
Study First
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 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.
portfolio compaay
Deal Structure
Dividends
Outstanding Stock
2. Term sheet for equity offering
Stock Price Agreement
Common Stock
Term Sheet
Business Summary
3. 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
Restricted Shares
Subordinated Debt
Limited Partner
small business investment companies (SBIC)
4. Selling an interest in your business to an outside party to raise money.
Senior Stock
equity financing
going private
raising capital
5. 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.
Term Sheet
angel investors
Market Capitalization
Bridge Financing
6. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
series a preferred stock
equity offerings
NDA (Non-disclosure agreement)
capital gain
7. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
corporate venturing
Venture Capital Financing
Liquidation
Liquidity Event
8. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Lead Investor
institutional investors
Preferred Stock
closing
9. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Capital Commitment
lock-up period
Angel Financing
Warrants
10. 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
Bootstrapping
Burn Rate
Preferred Stock
Subordinated Debt
11. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Membership Interest
secondary purchase
Limited Partnership Agreement
Qualified IPO
12. How much the company is worth before an investment
mezzanine financing
exit
Pre-Money Valuation
Business Plan
13. 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.
Preferred Stock
Term Sheet
capital under management
Closing
14. Cannot get other outside investors-No Shop
Elevator Pitch
General Partner (GP)
IPO (Initial Public Offering)
No Shop/Confidentiality
15. 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.
management buy-out (MBO)
angel investors
C Corporation
limited partnerships
16. 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
private investment in public equities (PIPE)
Restricted Shares
Seed Money
Internal Rate of Return
17. 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
benchmarks
S Corporation
Cash-out election
Preferred Stock
18. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Pre-Money Valuation
NDA (Non-disclosure agreement)
C Corporation
Venture Capital Financing
19. An investment vehicle designed to invest in a diversified group of investment funds.
Angel Financing
Bootstrapping
mezzanine financing
fund of funds
20. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Preferred Stock
IPO (Initial Public Offering)
Due Diligence
Senior Stock
21. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
S Corporation
leverage buy-out(LBO)
Voting Rights
Private Equity
22. 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
Restricted Shares
Preferred Stock
series a preferred stock
IPO (Initial Public Offering)
23. 'I will buy stock at price we negotiate'
follow-on
Due Diligence
Stock Price Agreement
Series A Preferred Stock
24. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
No Shop/Confidentiality
buyout
IPO(initial public offerings)
Bootstrapping
25. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Private Equity
venture capital
Membership Interest
26. 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.
due diligence
Pre-Money Valuation
secondary public offering
minority enterprise small business investment companies (MESBICS)
27. 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
Common Stock
return on investment (ROI)
Common Equity
Burn Rate
28. 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
leverage buy-out(LBO)
liquidation
Cash-out election
Post-Money Valuation
29. Pre-money valuation plus the amount invested in the latest round
Conversion Rights
Capitalization Table
NDA (Non-disclosure agreement)
Post-money
30. 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
term sheet
Bootstrapping
Limited Partner
IRR
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
Pre-Money Valuation
Deal Structure
Capital Call 'Drawdown'
private equity
32. 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
corporate venturing
Market Capitalization
Preferred Stock
exit route
33. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
syndication
Common Equity
Liquidity Event
Burn Rate
34. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Liquidation Preference
exit
Capital
Term Sheet
35. Letter of intent summarizing the key legal and financial terms
Liquidation Preference
Bootstrapping
Term Sheet
Preferred Stock
36. 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
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37. This refers to a synopsis of the key points of a business plan.
executive summary
Cash-out election
Capital Call 'Drawdown'
Market Capitalization
38. 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.
debt financing
secondary purchase
buyout
Venture Capital Financing
39. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Term Sheet
syndication
small business investment companies (SBIC)
angel investors
40. 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.
syndication
lead investor
Internal Rate of Return
exit route
41. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Private Equity
private equity
Liquidation Preference
Liquidation
42. 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
Dividends
venture capital
Capital
Bootstrapping
43. The amount of this available to a management team for venture investments.
capital under management
Common Equity
PPM
Dividends
44. 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) ...
Initial Public Offering
Term Sheet
Book Value
Outstanding Stock
45. 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.
Closing
benchmarks
Capital Commitment
recapitalization
46. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Equity
Preferred Stock
Restricted Stock
47. 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
turnaround
seed capital
Post-money
Pre-Money Valuation
48. The total value of the company immediately prior to the latest round of financing
Dividends
private equity
Business Summary
Pre-money valuation
49. Investments by a private equity fund in a publicly traded company - usually at a discount.
NDA (Non-disclosure agreement)
private investment in public equities (PIPE)
liquidation
closing
50. 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.
lock-up period
Anti-Dilution Protections
corporate venturing
Common Stock