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. 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






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






3. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






4. 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






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






6. 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.






7. Cannot get other outside investors-No Shop






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






9. 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






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






11. 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






12. Compound internal rate of return.






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






14. 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) ...






15. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






16. A study of the background and financial reliability of the company - management team and industry.






17. This refers to a synopsis of the key points of a business plan.






18. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






19. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






20. 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






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






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






23. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






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






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






26. 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






27. The residual ownership in a company like a corporation or LLC 51%=control






28. 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 -






29. 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.






30. How you get to vote






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






32. 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.).






33. 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






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.






35. 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.






36. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






37. 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.






38. 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.






39. 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.






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






41. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






42. 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






43. 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.






44. Term sheet for equity offering






45. 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.






46. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






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






48. 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.






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






50. 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