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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. 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.
Lead Investor
Anti-Dilution Protections
Bootstrapping
minority enterprise small business investment companies (MESBICS)
2. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Common Equity
Business Summary
Term Sheet
Conversion Rights
3. 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
Corporation (Limited liability and taxation)
Preferred Stock
Pre-Money Valuation
IRR
4. 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.
term sheet
lead investor
Stock Price Agreement
S Corporation
5. How much the company is worth before an investment
equity financing
going private
Pre-Money Valuation
Post-Money Valuation
6. 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.
Term Sheet
secondary public offering
Liquidation Preference
executive summary
7. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
acquisition
raising capital
Common Equity
Closing
8. 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
debt financing
management buy-out (MBO)
Liquidation Preference
Due Diligence
9. 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
Common Stock
Lead Investor
IPO(initial public offerings)
Capital
10. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
liquidation
Warrants
Capital
IPO(initial public offerings)
11. 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
secondary public offering
IPO(initial public offerings)
benchmarks
Preferred Stock
12. A study of the background and financial reliability of the company - management team and industry.
executive summary
Due Diligence
Common Stock
Limited Partner
13. Selling an interest in your business to an outside party to raise money.
private equity
Post-money
equity financing
S Corporation
14. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Elevator Pitch
capital under management
No Shop/Confidentiality
15. Issue of shares of a company to the public by the company (directly) for the first time.
Business Plan
IPO(initial public offerings)
management buy-in (MBI)
benchmarks
16. 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
Adjusted Book Value
Common Stock
seed capital
turnaround
17. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Capitalization Table
equity offerings
angel investors
Anti-Dilution Protections
18. How you get out
fund of funds
liquidation
Term Sheet
Liquidation Preference
19. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
institutional investors
NDA (Non-disclosure agreement)
lock-up period
Subordinated Debt
20. The party that manages a limited partnership and is liable for the debts of the company
Bridge Financing
General Partner (GP)
Seed Money
Preferred Stock
21. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
secondary purchase
closing
Capitalization Table
recapitalization
22. 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.
secondary purchase
benchmarks
Term Sheet
management buy-out (MBO)
23. The amount of this available to a management team for venture investments.
equity financing
Term Sheet
Cash-out election
capital under management
24. 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
Private Equity
Burn Rate
Liquidation Preference
Bootstrapping
25. 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
Initial Public Offering
bridge loans
return on investment (ROI)
mezzanine financing
26. 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.
Deal Structure
Conversion Rights
return on investment (ROI)
Stock Price Agreement
27. 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.
Business Plan
syndication
Membership Interest
secondary purchase
28. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Restricted Shares
Adjusted Book Value
Venture Capitalist
Liquidation
29. 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
General Partner (GP)
Voting Rights
debt financing
Venture Capitalist
30. 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
Liquidation
fund of funds
series a preferred stock
Internal Rate of Return
31. The maximum amount of cash that a partner is required to contribute under the terms
going private
Capital Commitment
benchmarks
Warrants
32. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
exit
buyout
Pre-Money Valuation
Limited Partner
33. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.
Bridge Financing
C Corporation
benchmarks
Term Sheet
34. 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
35. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
management buy-out (MBO)
exit route
due diligence
36. 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
Series A Preferred Stock
Common Stock
management buy-out (MBO)
benchmarks
37. 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
Liquidation Preference
Preferred Stock
Market Capitalization
limited partnerships
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
Common Equity
going private
Dividends
term sheet
39. 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.
Market Capitalization
exit
Preferred Stock
Senior Stock
40. This refers to a synopsis of the key points of a business plan.
executive summary
Liquidity Event
Dividends
C Corporation
41. The practice of a large company taking a minority equity position in a smaller company in a related field.
private equity
mezzanine financing
corporate venturing
Senior Stock
42. An IPO that has met certain
Venture Capitalist
turnaround
Conversion Rights
Qualified IPO
43. 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
mezzanine financing
Business Plan
going private
General Partner (GP)
44. The value at which an asset is carried on a balance sheet (the cost of the item)
Internal Rate of Return
raising capital
Book Value
IRR
45. No double tax - Limited number of investors
S Corporation
return on investment (ROI)
seed capital
venture capital
46. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Pre-Money Valuation
secondary public offering
going private
Corporation (Limited liability and taxation)
47. Letter of intent summarizing the key legal and financial terms
capital under management
S Corporation
Term Sheet
Subordinated Debt
48. A security with limits on its transferability. Usually issued in connection with a private placement
No Shop/Confidentiality
Restricted Stock
corporate venturing
Membership Interest
49. Term sheet for equity offering
seed capital
Lead Investor
Term Sheet
Business Summary
50. 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
exit
venture capital
Angel Financing
Series A Preferred Stock