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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 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
Term Sheet
liquidation
Internal Rate of Return
Preferred Stock
2. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Series A Preferred Stock
equity offerings
Limited Partner
liquidation
3. 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 -
Series A Preferred Stock
private investment in public equities (PIPE)
Voting Rights
limited partnerships
4. 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.
Capital Call 'Drawdown'
recapitalization
Closing
Restricted Shares
5. 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) ...
General Partner (GP)
Initial Public Offering
corporate venturing
Due Diligence
6. 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.
Venture Capitalist
Outstanding Stock
Burn Rate
Post-money
7. 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
institutional investors
Liquidation Preference
Capitalization Table
IPO(initial public offerings)
8. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
Term Sheet
Stock Price Agreement
Series A Preferred Stock
9. 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
S Corporation
Pre-money valuation
due diligence
Liquidation Preference
10. 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.
debt financing
Deal Structure
turnaround
Confidentiality
11. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Liquidation
Pre-Money Valuation
Conversion Rights
12. 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
Capital Commitment
Corporation (Limited liability and taxation)
going private
Lead Investor
13. 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
Pre-Money Valuation
Seed Money
Warrants
Bridge Financing
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
Bootstrapping
private equity
equity financing
Capital
15. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Venture Capital Financing
series a preferred stock
Liquidation
Bootstrapping
16. 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.
buyout
S Corporation
Venture Capital Financing
Anti-Dilution Protections
17. 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
IPO (Initial Public Offering)
Restricted Stock
Preferred Stock
18. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
management buy-out (MBO)
Post-Money Valuation
Stock Price Agreement
19. Don't talk to the market about the company
Senior Stock
lock-up period
Confidentiality
Lead Investor
20. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
equity offerings
Subordinated Debt
Limited Partnership Agreement
Due Diligence
21. The practice of a large company taking a minority equity position in a smaller company in a related field.
venture capital
Restricted Stock
corporate venturing
Burn Rate
22. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
Deal Structure
return on investment (ROI)
Common Stock
23. 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
raising capital
Venture Capitalist
Lead Investor
Common Equity
24. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
capital gain
Dividends
Series A Preferred Stock
closing
25. 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
Common Stock
acquisition
Due Diligence
corporate venturing
26. 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)
small business investment companies (SBIC)
Bridge Financing
IRR
27. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
limited partnerships
management buy-in (MBI)
small business investment companies (SBIC)
28. 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
Bridge Financing
leverage buy-out(LBO)
Series A Preferred Stock
portfolio compaay
29. 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.
Bootstrapping
Limited Partnership Agreement
private equity
Common Stock
30. Pre-money valuation plus the amount invested in the latest round
Post-money
closing
seed capital
raising capital
31. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Initial Public Offering
Warrants
Anti-Dilution Protections
Liquidation Preference
32. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
limited partnerships
exit route
Angel Financing
benchmarks
33. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Capital Call 'Drawdown'
exit
Post-Money Valuation
34. The way you buy stock
due diligence
mezzanine financing
PPM
Closing
35. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
small business investment companies (SBIC)
exit
turnaround
Venture Capital Financing
36. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Burn Rate
Term Sheet
Common Stock
37. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
buyout
Liquidation Preference
due diligence
Membership Interest
38. 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.).
return on investment (ROI)
Common Equity
Business Summary
institutional investors
39. The rate of return or profit that an investment is expected to earn.
secondary public offering
return on investment (ROI)
Internal Rate of Return
equity offerings
40. An IPO that has met certain
Lead Investor
Qualified IPO
Senior Stock
Capital Commitment
41. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Subordinated Debt
seed capital
management buy-in (MBI)
Restricted Stock
42. The residual ownership in a company like a corporation or LLC 51%=control
seed capital
Equity
Anti-Dilution Protections
capital gain
43. The maximum amount of cash that a partner is required to contribute under the terms
Closing
private investment in public equities (PIPE)
Capital Commitment
due diligence
44. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
PPM
term sheet
Elevator Pitch
45. Selling an interest in your business to an outside party to raise money.
Adjusted Book Value
Market Capitalization
equity financing
Venture Capital Financing
46. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
small business investment companies (SBIC)
Angel Financing
management buy-in (MBI)
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.
liquidation
Term Sheet
exit
Restricted Shares
48. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo
Preferred Stock
debt financing
secondary purchase
Due Diligence
49. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
Cash-out election
liquidation
secondary public offering
series a preferred stock
50. 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
Subordinated Debt
Market Capitalization
Common Equity
executive summary