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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. 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
Capitalization Table
Liquidity Event
Venture Capitalist
buyout
2. A security with limits on its transferability. Usually issued in connection with a private placement
Term Sheet
General Partner (GP)
Warrants
Restricted Stock
3. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
private equity
Burn Rate
Outstanding Stock
Subordinated Debt
4. 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
Initial Public Offering
Preferred Stock
going private
Limited Partnership Agreement
5. 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
Limited Partner
Restricted Stock
recapitalization
IPO (Initial Public Offering)
6. How you get out
Dividends
Confidentiality
Seed Money
Liquidation Preference
7. How much the company is worth before an investment
Business Plan
Liquidation Preference
Restricted Stock
Pre-Money Valuation
8. How you get to vote
turnaround
Voting Rights
Cash-out election
raising capital
9. Date the LP's subscription is effective and they become partner
institutional investors
exit
Closing
Market Capitalization
10. The company or entity into which a fund invests directly.
executive summary
debt financing
portfolio compaay
No Shop/Confidentiality
11. Investments by a private equity fund in a publicly traded company - usually at a discount.
Capital Call 'Drawdown'
private investment in public equities (PIPE)
Venture Capitalist
Warrants
12. The method by which an investor will realize an investment.
Internal Rate of Return
C Corporation
exit route
PPM
13. 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
Anti-Dilution Protections
private equity
Pre-Money Valuation
Cash-out election
14. Term sheet for equity offering
debt financing
Business Plan
portfolio compaay
Term Sheet
15. 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.
term sheet
Preferred Stock
Market Capitalization
Adjusted Book Value
16. The internal rate of return on an investment.
return on investment (ROI)
Preferred Stock
Term Sheet
seed capital
17. 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
Cash-out election
PPM
Post-money
18. The way you buy stock
angel investors
benchmarks
Senior Stock
PPM
19. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Angel Financing
Venture Capitalist
Preferred Stock
20. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
buyout
Limited Partner
Business Summary
IPO (Initial Public Offering)
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
series a preferred stock
Confidentiality
private equity
Elevator Pitch
22. 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.
Capital
Equity
Outstanding Stock
buyout
23. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Post-money
Liquidation Preference
Capital Commitment
buyout
24. 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
Business Plan
lead investor
Angel Financing
Common Stock
25. Compound internal rate of return.
small business investment companies (SBIC)
Burn Rate
IRR
Voting Rights
26. Don't talk to the market about the company
corporate venturing
limited partnerships
Confidentiality
IPO (Initial Public Offering)
27. 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
executive summary
minority enterprise small business investment companies (MESBICS)
lead investor
Series A Preferred Stock
28. 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
Qualified IPO
Pre-Money Valuation
Warrants
syndication
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.
mezzanine financing
Market Capitalization
Capital
IPO (Initial Public Offering)
30. 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.
Internal Rate of Return
syndication
Liquidation Preference
Elevator Pitch
31. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
mezzanine financing
Capital
Capital Call 'Drawdown'
32. 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
Restricted Shares
Bridge Financing
Capitalization Table
going private
33. This refers to obtaining capital from investors or venture capital sources.
Venture Capitalist
raising capital
management buy-in (MBI)
IRR
34. 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
return on investment (ROI)
venture capital
Dividends
Market Capitalization
35. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
capital under management
Business Summary
return on investment (ROI)
Capitalization Table
36. 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
limited partnerships
Restricted Stock
benchmarks
fund of funds
37. Letter of intent summarizing the key legal and financial terms
NDA (Non-disclosure agreement)
Venture Capital Financing
Term Sheet
secondary purchase
38. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid
Seed Money
IPO(initial public offerings)
Capital Call 'Drawdown'
Elevator Pitch
39. 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
40. 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
due diligence
No Shop/Confidentiality
Lead Investor
small business investment companies (SBIC)
41. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Limited Partner
angel investors
Business Summary
Conversion Rights
42. 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
Cash-out election
Capital Commitment
Limited Partnership Agreement
IPO (Initial Public Offering)
43. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
IRR
due diligence
NDA (Non-disclosure agreement)
raising capital
44. The residual ownership in a company like a corporation or LLC 51%=control
Private Equity
Equity
Warrants
term sheet
45. 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
Private Equity
IRR
Pre-money valuation
fund of funds
46. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
private equity
Common Stock
Common Stock
47. 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.
capital under management
liquidation
due diligence
recapitalization
48. The rate of return or profit that an investment is expected to earn.
minority enterprise small business investment companies (MESBICS)
Internal Rate of Return
limited partnerships
Post-Money Valuation
49. 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
Business Summary
debt financing
bridge loans
closing
50. The practice of a large company taking a minority equity position in a smaller company in a related field.
executive summary
Post-money
corporate venturing
Private Equity