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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. The method by which an investor will realize an investment.
debt financing
private investment in public equities (PIPE)
executive summary
exit route
2. 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
liquidation
Liquidation
Liquidation Preference
bridge loans
3. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Subordinated Debt
private investment in public equities (PIPE)
Stock Price Agreement
4. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Angel Financing
Capitalization Table
turnaround
5. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.
angel investors
term sheet
private investment in public equities (PIPE)
bridge loans
6. 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
Post-Money Valuation
Limited Partnership Agreement
Seed Money
syndication
7. How you get to vote
Capital Commitment
turnaround
Deal Structure
Voting Rights
8. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Business Summary
Preferred Stock
leverage buy-out(LBO)
debt financing
9. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Capital Commitment
angel investors
capital gain
Conversion Rights
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
Preferred Stock
benchmarks
Capital Call 'Drawdown'
Adjusted Book Value
11. 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
Elevator Pitch
going private
follow-on
management buy-in (MBI)
12. The practice of a large company taking a minority equity position in a smaller company in a related field.
Restricted Stock
executive summary
Bridge Financing
corporate venturing
13. 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
IPO(initial public offerings)
private investment in public equities (PIPE)
Bootstrapping
Liquidation Preference
14. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Voting Rights
Angel Financing
Common Equity
Venture Capitalist
15. Selling an interest in your business to an outside party to raise money.
liquidation
Due Diligence
Pre-Money Valuation
equity financing
16. 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.
Preferred Stock
portfolio compaay
Seed Money
term sheet
17. An investment vehicle designed to invest in a diversified group of investment funds.
due diligence
fund of funds
bridge loans
Limited Partnership Agreement
18. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
series a preferred stock
secondary purchase
equity financing
Restricted Stock
19. 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.
Closing
Outstanding Stock
private equity
Adjusted Book Value
20. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
Dividends
institutional investors
NDA (Non-disclosure agreement)
21. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Initial Public Offering
Bridge Financing
Term Sheet
22. The company or entity into which a fund invests directly.
portfolio compaay
executive summary
equity financing
Corporation (Limited liability and taxation)
23. 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
fund of funds
Capital Commitment
mezzanine financing
Series A Preferred Stock
24. The equity ownership in a corporation. Also has basic voting rights
exit route
Common Stock
PPM
Qualified IPO
25. This refers to a synopsis of the key points of a business plan.
closing
executive summary
Qualified IPO
lock-up period
26. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Stock Price Agreement
Anti-Dilution Protections
Restricted Shares
exit route
27. Date the LP's subscription is effective and they become partner
Closing
secondary public offering
syndication
Voting Rights
28. 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.
term sheet
Private Equity
Market Capitalization
follow-on
29. 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
Private Equity
Pre-Money Valuation
term sheet
Business Plan
30. The rate of return or profit that an investment is expected to earn.
closing
Internal Rate of Return
recapitalization
Capital
31. 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
corporate venturing
Senior Stock
Outstanding Stock
private equity
32. Assets are subject to double taxation - Unlimited number of investors
Membership Interest
Stock Price Agreement
C Corporation
Market Capitalization
33. 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
Capitalization Table
seed capital
Lead Investor
S Corporation
34. 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
Preferred Stock
Bridge Financing
Internal Rate of Return
capital gain
35. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
Deal Structure
Voting Rights
secondary purchase
36. Pre-money valuation plus the amount invested in the latest round
management buy-out (MBO)
S Corporation
Post-money
Lead Investor
37. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
mezzanine financing
corporate venturing
series a preferred stock
Initial Public Offering
38. Compound internal rate of return.
venture capital
term sheet
IRR
exit route
39. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.
mezzanine financing
lock-up period
debt financing
Closing
40. 'I will buy stock at price we negotiate'
Angel Financing
Term Sheet
benchmarks
Stock Price Agreement
41. 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
Business Summary
Restricted Shares
term sheet
Pre-Money Valuation
42. 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
equity offerings
Market Capitalization
small business investment companies (SBIC)
C Corporation
43. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Confidentiality
closing
S Corporation
corporate venturing
44. 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
Preferred Stock
IPO(initial public offerings)
portfolio compaay
45. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.
small business investment companies (SBIC)
Pre-money valuation
turnaround
Liquidation Preference
46. 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)
acquisition
C Corporation
47. An IPO that has met certain
lead investor
Angel Financing
NDA (Non-disclosure agreement)
Qualified IPO
48. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Deal Structure
Membership Interest
angel investors
Post-Money Valuation
49. 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) ...
Initial Public Offering
Private Equity
Lead Investor
bridge loans
50. How much the company is worth before an investment
NDA (Non-disclosure agreement)
Pre-Money Valuation
Venture Capitalist
buyout