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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. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
buyout
Preferred Stock
Common Equity
Stock Price Agreement
2. Term sheet for equity offering
capital under management
Term Sheet
exit
minority enterprise small business investment companies (MESBICS)
3. 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
Business Plan
Limited Partner
Common Stock
mezzanine financing
4. Investments by a private equity fund in a publicly traded company - usually at a discount.
lock-up period
equity offerings
Restricted Stock
private investment in public equities (PIPE)
5. How you get out
venture capital
executive summary
Liquidation Preference
Due Diligence
6. 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
Business Summary
management buy-in (MBI)
Qualified IPO
Venture Capitalist
7. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Conversion Rights
Bridge Financing
Post-money
exit
8. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Market Capitalization
Capital
Business Summary
leverage buy-out(LBO)
9. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
IPO (Initial Public Offering)
buyout
Senior Stock
capital under management
10. 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.
exit route
Outstanding Stock
term sheet
Stock Price Agreement
11. 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
buyout
Series A Preferred Stock
Venture Capitalist
Membership Interest
12. 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.
Qualified IPO
secondary public offering
Closing
going private
13. 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
Preferred Stock
Voting Rights
Preferred Stock
seed capital
14. Cannot get other outside investors-No Shop
return on investment (ROI)
Common Stock
No Shop/Confidentiality
Conversion Rights
15. The way you buy stock
Post-Money Valuation
Adjusted Book Value
Liquidation Preference
PPM
16. A study of the background and financial reliability of the company - management team and industry.
Pre-Money Valuation
syndication
Due Diligence
Post-money
17. The company or entity into which a fund invests directly.
acquisition
Common Equity
capital under management
portfolio compaay
18. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.
follow-on
Adjusted Book Value
Private Equity
Senior Stock
19. 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.
recapitalization
Market Capitalization
Membership Interest
Capitalization Table
20. 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.
Preferred Stock
Venture Capitalist
lock-up period
follow-on
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
raising capital
series a preferred stock
lock-up period
Liquidation Preference
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 maximum amount of cash that a partner is required to contribute under the terms
portfolio compaay
secondary public offering
Business Summary
Capital Commitment
24. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
IPO(initial public offerings)
exit route
Adjusted Book Value
Lead Investor
25. 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.
Pre-Money Valuation
going private
term sheet
C Corporation
26. The residual ownership in a company like a corporation or LLC 51%=control
Equity
equity financing
Seed Money
Limited Partnership Agreement
27. The equity ownership in a corporation. Also has basic voting rights
Term Sheet
Common Stock
Series A Preferred Stock
private equity
28. 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
going private
acquisition
Elevator Pitch
Bootstrapping
29. 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
exit route
Anti-Dilution Protections
secondary public offering
30. 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) ...
return on investment (ROI)
Elevator Pitch
Post-money
Initial Public Offering
31. Issue of shares of a company to the public by the company (directly) for the first time.
C Corporation
minority enterprise small business investment companies (MESBICS)
IPO(initial public offerings)
seed capital
32. Letter of intent summarizing the key legal and financial terms
Term Sheet
mezzanine financing
executive summary
IRR
33. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation
due diligence
Dividends
S Corporation
buyout
34. 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
institutional investors
Market Capitalization
Liquidation Preference
35. 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
Post-Money Valuation
Market Capitalization
exit route
Membership Interest
36. 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
Pre-Money Valuation
Capital
Limited Partner
Senior Stock
37. 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
Post-money
Bridge Financing
Cash-out election
Membership Interest
38. 'I will buy stock at price we negotiate'
Capital Commitment
IPO(initial public offerings)
Angel Financing
Stock Price Agreement
39. Selling an interest in your business to an outside party to raise money.
Bootstrapping
equity financing
Confidentiality
Dividends
40. 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.
Preferred Stock
equity financing
No Shop/Confidentiality
minority enterprise small business investment companies (MESBICS)
41. 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
going private
exit route
Lead Investor
Private Equity
42. The rate at which a company expends net cash over a certain period - usually a month.
IPO (Initial Public Offering)
buyout
Private Equity
Burn Rate
43. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
limited partnerships
due diligence
syndication
Limited Partner
44. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
management buy-in (MBI)
Book Value
angel investors
No Shop/Confidentiality
45. 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.
Bridge Financing
Seed Money
going private
equity financing
46. 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.
S Corporation
liquidation
Series A Preferred Stock
Preferred Stock
47. 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
Capital Commitment
Confidentiality
fund of funds
benchmarks
48. No double tax - Limited number of investors
Bridge Financing
S Corporation
equity offerings
lead investor
49. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Equity
Limited Partnership Agreement
leverage buy-out(LBO)
series a preferred stock
50. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
Initial Public Offering
minority enterprise small business investment companies (MESBICS)
Liquidation