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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. An investment vehicle designed to invest in a diversified group of investment funds.
Common Stock
due diligence
fund of funds
Initial Public Offering
2. The party that manages a limited partnership and is liable for the debts of the company
Preferred Stock
Liquidation Preference
General Partner (GP)
debt financing
3. The value at which an asset is carried on a balance sheet (the cost of the item)
exit route
PPM
series a preferred stock
Book Value
4. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo
Term Sheet
Qualified IPO
Liquidity Event
debt financing
5. 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
corporate venturing
Seed Money
Subordinated Debt
bridge loans
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.
Venture Capital Financing
Term Sheet
General Partner (GP)
recapitalization
7. 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
seed capital
secondary public offering
Common Stock
due diligence
8. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
Outstanding Stock
series a preferred stock
management buy-in (MBI)
9. 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
fund of funds
corporate venturing
Post-Money Valuation
10. Selling an interest in your business to an outside party to raise money.
Equity
capital gain
follow-on
equity financing
11. 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.
limited partnerships
Internal Rate of Return
angel investors
liquidation
12. 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.
private equity
Subordinated Debt
Outstanding Stock
Private Equity
13. The equity ownership in a corporation. Also has basic voting rights
Corporation (Limited liability and taxation)
Common Stock
Common Equity
venture capital
14. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
term sheet
limited partnerships
C Corporation
15. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
private investment in public equities (PIPE)
Dividends
syndication
16. Cannot get other outside investors-No Shop
IPO(initial public offerings)
Market Capitalization
Conversion Rights
No Shop/Confidentiality
17. 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.
Voting Rights
portfolio compaay
Liquidation Preference
Venture Capital Financing
18. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Post-money
Due Diligence
buyout
19. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
return on investment (ROI)
exit
IPO (Initial Public Offering)
20. 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
Elevator Pitch
management buy-in (MBI)
Book Value
Corporation (Limited liability and taxation)
21. 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
Market Capitalization
Pre-money valuation
Qualified IPO
lock-up period
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 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 -
debt financing
limited partnerships
liquidation
Term Sheet
24. 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
Adjusted Book Value
series a preferred stock
Capitalization Table
Restricted Shares
25. 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) ...
Elevator Pitch
management buy-in (MBI)
Anti-Dilution Protections
Initial Public Offering
26. An IPO that has met certain
syndication
benchmarks
Common Stock
Qualified IPO
27. This refers to obtaining capital from investors or venture capital sources.
raising capital
Restricted Stock
Cash-out election
Due Diligence
28. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
minority enterprise small business investment companies (MESBICS)
Angel Financing
Preferred Stock
29. 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
Liquidation
Private Equity
benchmarks
Preferred Stock
30. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares
Post-Money Valuation
raising capital
Restricted Shares
Subordinated Debt
31. 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
Liquidity Event
Private Equity
Preferred Stock
Elevator Pitch
32. 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.
Capital Commitment
Bootstrapping
C Corporation
equity financing
33. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Restricted Stock
private investment in public equities (PIPE)
Business Summary
buyout
34. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
IPO (Initial Public Offering)
leverage buy-out(LBO)
limited partnerships
Restricted Shares
35. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Capitalization Table
Liquidation Preference
Angel Financing
36. Term sheet for equity offering
Warrants
IPO(initial public offerings)
Term Sheet
Deal Structure
37. This refers to a synopsis of the key points of a business plan.
Liquidation Preference
NDA (Non-disclosure agreement)
Deal Structure
executive summary
38. How you get to vote
Voting Rights
Membership Interest
Conversion Rights
secondary public offering
39. Issue of shares of a company to the public by the company (directly) for the first time.
debt financing
S Corporation
IPO(initial public offerings)
Deal Structure
40. 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.
Restricted Shares
turnaround
Market Capitalization
Pre-Money Valuation
41. Assets are subject to double taxation - Unlimited number of investors
Anti-Dilution Protections
private equity
C Corporation
Seed Money
42. 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
Common Stock
Corporation (Limited liability and taxation)
IPO (Initial Public Offering)
private equity
43. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Outstanding Stock
liquidation
Subordinated Debt
Common Stock
44. How much the company is worth before an investment
Term Sheet
Pre-Money Valuation
Seed Money
Business Summary
45. 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
Confidentiality
Post-Money Valuation
Private Equity
Outstanding Stock
46. 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
management buy-in (MBI)
bridge loans
IPO (Initial Public Offering)
Pre-money valuation
47. Investments by a private equity fund in a publicly traded company - usually at a discount.
Liquidation Preference
private investment in public equities (PIPE)
limited partnerships
IPO (Initial Public Offering)
48. No double tax - Limited number of investors
capital under management
institutional investors
General Partner (GP)
S Corporation
49. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
mezzanine financing
term sheet
due diligence
minority enterprise small business investment companies (MESBICS)
50. 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
portfolio compaay
follow-on
small business investment companies (SBIC)
seed capital