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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. The company or entity into which a fund invests directly.
S Corporation
Liquidation Preference
portfolio compaay
recapitalization
2. The party that manages a limited partnership and is liable for the debts of the company
No Shop/Confidentiality
Dividends
Book Value
General Partner (GP)
3. 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.).
Capital
Post-Money Valuation
equity offerings
institutional investors
4. The method by which an investor will realize an investment.
exit route
management buy-out (MBO)
Venture Capital Financing
Outstanding Stock
5. Term sheet for equity offering
portfolio compaay
Private Equity
Restricted Stock
Term Sheet
6. Pre-money valuation plus the amount invested in the latest round
S Corporation
angel investors
Post-money
Bridge Financing
7. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l
bridge loans
fund of funds
Liquidation Preference
private equity
8. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in
capital gain
Common Stock
management buy-in (MBI)
Capital
9. The value at which an asset is carried on a balance sheet (the cost of the item)
Pre-Money Valuation
Book Value
management buy-in (MBI)
Market Capitalization
10. 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
Cash-out election
Post-Money Valuation
secondary purchase
Liquidity Event
11. 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
Business Plan
Pre-Money Valuation
Private Equity
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
management buy-in (MBI)
Capitalization Table
Due Diligence
NDA (Non-disclosure agreement)
13. A study of the background and financial reliability of the company - management team and industry.
Common Equity
Common Stock
Due Diligence
IPO(initial public offerings)
14. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
Burn Rate
Venture Capitalist
fund of funds
15. How you get out
Liquidation Preference
Deal Structure
Capital Call 'Drawdown'
Due Diligence
16. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
lead investor
syndication
Limited Partner
exit
17. No double tax - Limited number of investors
secondary public offering
Restricted Stock
Preferred Stock
S Corporation
18. The way you buy stock
secondary purchase
PPM
Bridge Financing
Common Equity
19. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
raising capital
Due Diligence
Preferred Stock
Angel Financing
20. Letter of intent summarizing the key legal and financial terms
Business Plan
due diligence
Term Sheet
liquidation
21. The maximum amount of cash that a partner is required to contribute under the terms
Term Sheet
Capital Commitment
going private
Business Summary
22. An investment vehicle designed to invest in a diversified group of investment funds.
Anti-Dilution Protections
executive summary
Conversion Rights
fund of funds
23. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Cash-out election
corporate venturing
Liquidation
Voting Rights
24. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Conversion Rights
capital gain
debt financing
Corporation (Limited liability and taxation)
25. 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
return on investment (ROI)
secondary purchase
IPO (Initial Public Offering)
Preferred Stock
26. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
Term Sheet
Liquidation Preference
private equity
27. The rate of return or profit that an investment is expected to earn.
series a preferred stock
Internal Rate of Return
PPM
management buy-in (MBI)
28. 'I will buy stock at price we negotiate'
Cash-out election
Stock Price Agreement
lock-up period
term sheet
29. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
leverage buy-out(LBO)
raising capital
closing
Angel Financing
30. The residual ownership in a company like a corporation or LLC 51%=control
Equity
angel investors
seed capital
bridge loans
31. 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
Dividends
term sheet
secondary public offering
going private
32. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Liquidation Preference
Series A Preferred Stock
Equity
33. 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
lead investor
Preferred Stock
liquidation
Business Plan
34. 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
raising capital
Liquidity Event
benchmarks
Liquidation
35. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.
Dividends
Deal Structure
Senior Stock
Market Capitalization
36. Issue of shares of a company to the public by the company (directly) for the first time.
Liquidation
Term Sheet
IPO(initial public offerings)
Capital Call 'Drawdown'
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.
going private
Pre-Money Valuation
Preferred Stock
private investment in public equities (PIPE)
38. Compound internal rate of return.
Capitalization Table
IRR
Limited Partnership Agreement
venture capital
39. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Capital Commitment
Voting Rights
NDA (Non-disclosure agreement)
turnaround
40. The total value of the company immediately prior to the latest round of financing
follow-on
Common Equity
Pre-money valuation
private equity
41. 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
Closing
Membership Interest
Bridge Financing
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
Internal Rate of Return
Bridge Financing
secondary public offering
private equity
43. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Common Stock
exit route
Membership Interest
Common Stock
44. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Corporation (Limited liability and taxation)
portfolio compaay
Subordinated Debt
series a preferred stock
45. 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
Membership Interest
recapitalization
Preferred Stock
Common Equity
46. 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
Venture Capitalist
small business investment companies (SBIC)
closing
secondary purchase
47. 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
lead investor
General Partner (GP)
Restricted Shares
Market Capitalization
48. The internal rate of return on an investment.
acquisition
return on investment (ROI)
term sheet
Limited Partner
49. 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
Voting Rights
venture capital
Stock Price Agreement
debt financing
50. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Angel Financing
minority enterprise small business investment companies (MESBICS)
Senior Stock
Seed Money