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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






2. 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






3. 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.






4. 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.






5. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






6. 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.






7. 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






8. 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.






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






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






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






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






13. 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






14. 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






15. How you get to vote






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






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






18. 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 -






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






20. 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.






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. How much the company is worth before an investment






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






24. Term sheet for equity offering






25. A business owned by stockholders who share in its profits but are not personally responsible for its debts






26. 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) ...






27. 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






28. The internal rate of return on an investment.






29. 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






30. The total value of the company immediately prior to the latest round of financing






31. 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






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






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






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






35. 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.






36. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






37. 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.






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

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39. 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






40. How you get out






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






42. Compound internal rate of return.






43. 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






44. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






45. 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.






46. 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






47. Don't talk to the market about the company






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






49. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.






50. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).