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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. Pre-money valuation plus the amount invested in the latest round






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






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






4. 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






5. 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.






6. Cannot get other outside investors-No Shop






7. The internal rate of return on an investment.






8. This refers to obtaining capital from investors or venture capital sources.






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






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






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






12. 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.






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






14. An investment vehicle designed to invest in a diversified group of investment funds.






15. 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.






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






17. 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






18. 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






19. 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






20. 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.






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






22. How you get to vote






23. How you get out






24. 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






25. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






26. The method by which an investor will realize an investment.






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






28. 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






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






30. 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






31. 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






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






33. 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






34. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






35. 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






36. 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






37. 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






38. 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






39. 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






40. No double tax - Limited number of investors






41. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






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






43. Compound internal rate of return.






44. 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.






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






46. The way you buy stock






47. 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.






48. 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.






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






50. 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