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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. 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
Preferred Stock
management buy-in (MBI)
Cash-out election
Preferred Stock
2. 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
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3. 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.
recapitalization
Capital Commitment
return on investment (ROI)
follow-on
4. A security with limits on its transferability. Usually issued in connection with a private placement
benchmarks
exit
Initial Public Offering
Restricted Stock
5. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Corporation (Limited liability and taxation)
private equity
syndication
Cash-out election
6. 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
turnaround
Preferred Stock
leverage buy-out(LBO)
No Shop/Confidentiality
7. The internal rate of return on an investment.
return on investment (ROI)
Liquidity Event
Business Plan
private investment in public equities (PIPE)
8. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Qualified IPO
No Shop/Confidentiality
return on investment (ROI)
9. Pre-money valuation plus the amount invested in the latest round
NDA (Non-disclosure agreement)
seed capital
buyout
Post-money
10. Investments by a private equity fund in a publicly traded company - usually at a discount.
closing
Stock Price Agreement
private investment in public equities (PIPE)
going private
11. 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
Liquidation Preference
Outstanding Stock
Limited Partner
General Partner (GP)
12. The total value of the company immediately prior to the latest round of financing
Limited Partnership Agreement
Common Stock
Series A Preferred Stock
Pre-money valuation
13. The method by which an investor will realize an investment.
Conversion Rights
exit route
portfolio compaay
Due Diligence
14. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.
private investment in public equities (PIPE)
General Partner (GP)
term sheet
lead investor
15. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Common Stock
due diligence
NDA (Non-disclosure agreement)
capital gain
16. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
General Partner (GP)
S Corporation
Outstanding Stock
17. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
private investment in public equities (PIPE)
Pre-Money Valuation
Equity
Capital
18. 'I will buy stock at price we negotiate'
Stock Price Agreement
Outstanding Stock
series a preferred stock
secondary public offering
19. Term sheet for equity offering
Common Stock
Equity
Term Sheet
Common Stock
20. 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 -
minority enterprise small business investment companies (MESBICS)
lead investor
limited partnerships
Initial Public Offering
21. How you get out
Term Sheet
Senior Stock
Term Sheet
Liquidation Preference
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
Restricted Stock
Conversion Rights
private equity
seed capital
23. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Pre-Money Valuation
Bootstrapping
exit
Business Summary
24. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
debt financing
Liquidity Event
seed capital
25. Don't talk to the market about the company
Private Equity
Adjusted Book Value
term sheet
Confidentiality
26. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
private investment in public equities (PIPE)
secondary purchase
exit
Angel Financing
27. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public
Lead Investor
closing
Market Capitalization
Pre-Money Valuation
28. 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
mezzanine financing
Limited Partner
Equity
Capital Call 'Drawdown'
29. 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.
Venture Capital Financing
Warrants
term sheet
Membership Interest
30. 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
Confidentiality
Capitalization Table
Closing
leverage buy-out(LBO)
31. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Liquidation Preference
Subordinated Debt
Venture Capitalist
Limited Partnership Agreement
32. 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.
lock-up period
Common Equity
Restricted Stock
Subordinated Debt
33. 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
Liquidation Preference
Common Stock
Restricted Shares
secondary purchase
34. The rate of return or profit that an investment is expected to earn.
private investment in public equities (PIPE)
Qualified IPO
Internal Rate of Return
Deal Structure
35. 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.
Confidentiality
Bootstrapping
leverage buy-out(LBO)
C Corporation
36. 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)
PPM
bridge loans
IPO(initial public offerings)
37. 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
IPO (Initial Public Offering)
Internal Rate of Return
C Corporation
Subordinated Debt
38. 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
leverage buy-out(LBO)
IRR
Confidentiality
39. Cannot get other outside investors-No Shop
recapitalization
Outstanding Stock
No Shop/Confidentiality
corporate venturing
40. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
going private
capital gain
Restricted Stock
Conversion Rights
41. Issue of shares of a company to the public by the company (directly) for the first time.
IRR
executive summary
IPO(initial public offerings)
buyout
42. 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.
corporate venturing
Elevator Pitch
secondary purchase
mezzanine financing
43. The amount of this available to a management team for venture investments.
lock-up period
Pre-money valuation
capital under management
Pre-Money Valuation
44. 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.
buyout
Deal Structure
debt financing
Cash-out election
45. 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
Anti-Dilution Protections
Limited Partnership Agreement
Voting Rights
Post-Money Valuation
46. 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
Business Plan
Common Stock
capital under management
recapitalization
47. 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
small business investment companies (SBIC)
series a preferred stock
Preferred Stock
Angel Financing
48. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
capital gain
equity offerings
Capital Call 'Drawdown'
Adjusted Book Value
49. 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.
acquisition
Capital Commitment
Subordinated Debt
syndication
50. Compound internal rate of return.
Capital Commitment
Angel Financing
IRR
Deal Structure