Test your basic knowledge |

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. 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.






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






3. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






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






5. 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






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






7. 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






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






9. 'I will buy stock at price we negotiate'






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






11. 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






12. 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.






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






14. The maximum amount of cash that a partner is required to contribute under the terms






15. 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.






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






17. 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.






18. 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






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






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






21. Issue of shares of a company to the public by the company (directly) for the first time.






22. Compound internal rate of return.






23. How you get out






24. Investments by a private equity fund in a publicly traded company - usually at a discount.






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






26. How much the company is worth before an investment






27. Selling an interest in your business to an outside party to raise money.






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






29. Term sheet for equity offering






30. 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






31. 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






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






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






34. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






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






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






37. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






38. 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






39. 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






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






41. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






42. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






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






44. Cannot get other outside investors-No Shop






45. How you get to vote






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






47. 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.






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






49. Document between general and limited partnership of each fund spells out details of the partnership.






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