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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






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






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






4. 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






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






6. A security with limits on its transferability. Usually issued in connection with a private placement






7. 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






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






9. 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






10. 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






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






12. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






13. 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






14. 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






15. 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






16. 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.).






17. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






18. 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.






19. 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.






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






21. 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






22. 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






23. The company or entity into which a fund invests directly.






24. 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.






25. Date the LP's subscription is effective and they become partner






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






27. 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






28. 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.






29. The rate at which a company expends net cash over a certain period - usually a month.






30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






31. 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






32. Don't talk to the market about the company






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






34. 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






35. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






36. 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.






37. How you get to vote






38. 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.






39. 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.






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






41. How you get out






42. 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.






43. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






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






45. 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






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






47. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






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






49. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






50. 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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