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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. 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
Limited Partner
private equity
lock-up period
Outstanding Stock
2. 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.
Capital
lock-up period
angel investors
exit route
3. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Restricted Stock
Warrants
Market Capitalization
equity financing
4. 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) ...
secondary public offering
Initial Public Offering
Pre-Money Valuation
corporate venturing
5. 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.
No Shop/Confidentiality
acquisition
Elevator Pitch
due diligence
6. The value at which an asset is carried on a balance sheet (the cost of the item)
Private Equity
Restricted Stock
closing
Book Value
7. This refers to obtaining capital from investors or venture capital sources.
Outstanding Stock
raising capital
secondary purchase
Preferred Stock
8. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
return on investment (ROI)
syndication
Adjusted Book Value
closing
9. Document between general and limited partnership of each fund spells out details of the partnership.
debt financing
C Corporation
Common Stock
Limited Partnership Agreement
10. 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
management buy-in (MBI)
Subordinated Debt
NDA (Non-disclosure agreement)
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
Conversion Rights
going private
due diligence
fund of funds
12. The way you buy stock
fund of funds
recapitalization
PPM
C Corporation
13. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Warrants
Conversion Rights
equity offerings
Capital
14. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Restricted Stock
fund of funds
seed capital
Senior Stock
15. A study of the background and financial reliability of the company - management team and industry.
Pre-Money Valuation
Due Diligence
Capital Call 'Drawdown'
Seed Money
16. 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
S Corporation
Cash-out election
Dividends
Outstanding Stock
17. Pre-money valuation plus the amount invested in the latest round
secondary public offering
venture capital
Post-money
IPO(initial public offerings)
18. 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.
Confidentiality
Bridge Financing
Venture Capitalist
Private Equity
19. The residual ownership in a company like a corporation or LLC 51%=control
Elevator Pitch
Equity
Confidentiality
Term Sheet
20. The method by which an investor will realize an investment.
exit route
angel investors
venture capital
Lead Investor
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
term sheet
Preferred Stock
series a preferred stock
venture capital
22. 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
C Corporation
Internal Rate of Return
Private Equity
going private
23. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
No Shop/Confidentiality
NDA (Non-disclosure agreement)
Senior Stock
24. 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 Stock
closing
secondary public offering
small business investment companies (SBIC)
25. 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.
leverage buy-out(LBO)
Bootstrapping
exit
Preferred Stock
26. 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
capital gain
Qualified IPO
NDA (Non-disclosure agreement)
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
equity offerings
Series A Preferred Stock
limited partnerships
Limited Partnership Agreement
28. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
IPO (Initial Public Offering)
Seed Money
Preferred Stock
29. 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.
Term Sheet
exit
Outstanding Stock
leverage buy-out(LBO)
30. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Subordinated Debt
Book Value
equity offerings
31. The rate of return or profit that an investment is expected to earn.
NDA (Non-disclosure agreement)
Qualified IPO
Anti-Dilution Protections
Internal Rate of Return
32. 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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33. 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.
minority enterprise small business investment companies (MESBICS)
portfolio compaay
executive summary
IRR
34. Issue of shares of a company to the public by the company (directly) for the first time.
turnaround
IPO(initial public offerings)
raising capital
capital under management
35. 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
Seed Money
Common Stock
Venture Capitalist
Elevator Pitch
36. Assets are subject to double taxation - Unlimited number of investors
Seed Money
C Corporation
benchmarks
Series A Preferred Stock
37. 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.
term sheet
Lead Investor
syndication
Confidentiality
38. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
equity offerings
Voting Rights
Common Stock
39. The internal rate of return on an investment.
return on investment (ROI)
Liquidity Event
secondary public offering
going private
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.
equity financing
debt financing
recapitalization
Preferred Stock
41. 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.
turnaround
Elevator Pitch
leverage buy-out(LBO)
Bootstrapping
42. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
leverage buy-out(LBO)
series a preferred stock
Internal Rate of Return
capital gain
43. The company or entity into which a fund invests directly.
Voting Rights
General Partner (GP)
portfolio compaay
closing
44. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Post-money
Cash-out election
limited partnerships
Subordinated Debt
45. Don't talk to the market about the company
Closing
Confidentiality
Outstanding Stock
Warrants
46. 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.
management buy-out (MBO)
leverage buy-out(LBO)
syndication
portfolio compaay
47. 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
Limited Partner
Series A Preferred Stock
Capitalization Table
management buy-in (MBI)
48. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
capital gain
Common Equity
Liquidation Preference
equity financing
49. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
going private
equity offerings
exit route
Deal Structure
50. 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
Pre-Money Valuation
Business Summary
Capitalization Table
turnaround