Test your basic knowledge |

Venture Capital

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.






2. 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.






3. The amount of this available to a management team for venture investments.






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






5. 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






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






7. 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






8. 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






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






10. 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.






11. Assets are subject to double taxation - Unlimited number of investors






12. 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 -






13. The maximum amount of cash that a partner is required to contribute under the terms






14. The equity ownership in a corporation. Also has basic voting rights






15. 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






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






17. 'I will buy stock at price we negotiate'






18. How you get out






19. The method by which an investor will realize an investment.






20. An IPO that has met certain






21. Compound internal rate of return.






22. 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






23. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






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






25. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






26. 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.






27. The rate of return or profit that an investment is expected to earn.






28. The company or entity into which a fund invests directly.






29. 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.






30. This refers to obtaining capital from investors or venture capital sources.






31. 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.






32. 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.






33. Term sheet for equity offering






34. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






35. Date the LP's subscription is effective and they become partner






36. No double tax - Limited number of investors






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






38. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






39. 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






40. Cannot get other outside investors-No Shop






41. How you get to vote






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






43. 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






44. 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.






45. Letter of intent summarizing the key legal and financial terms






46. 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.






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






48. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






49. 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






50. 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.