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. Document between general and limited partnership of each fund spells out details of the partnership.






2. The rate at which a company expends net cash over a certain period - usually a month.






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






4. The way you buy stock






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






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






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






8. 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.






9. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






10. 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.






11. 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.






12. 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






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






14. 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






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






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






17. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






18. 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.






19. 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.






20. 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.






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






22. 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






23. 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






24. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






25. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






26. 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






27. 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






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






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






30. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






31. How much the company is worth before an investment






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.






33. How you get to vote






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






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






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






37. Term sheet for equity offering






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






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






40. 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


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






42. 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






43. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






44. Compound internal rate of return.






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






46. 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.






47. An IPO that has met certain






48. 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






49. 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






50. 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.