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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. An investment vehicle designed to invest in a diversified group of investment funds.
NDA (Non-disclosure agreement)
Common Equity
fund of funds
institutional investors
2. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Capital Commitment
Angel Financing
benchmarks
3. 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.
bridge loans
Deal Structure
Voting Rights
Outstanding Stock
4. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
private equity
IPO (Initial Public Offering)
angel investors
lock-up period
5. 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.
Subordinated Debt
Restricted Stock
acquisition
due diligence
6. 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
Pre-money valuation
benchmarks
turnaround
General Partner (GP)
7. 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.
Outstanding Stock
corporate venturing
due diligence
portfolio compaay
8. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
seed capital
Conversion Rights
executive summary
management buy-out (MBO)
9. 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.
Deal Structure
small business investment companies (SBIC)
management buy-out (MBO)
institutional investors
10. 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
Common Stock
IRR
Preferred Stock
Adjusted Book Value
11. This refers to a synopsis of the key points of a business plan.
Venture Capitalist
Closing
executive summary
Preferred Stock
12. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Closing
Book Value
Deal Structure
equity offerings
13. Pre-money valuation plus the amount invested in the latest round
Confidentiality
small business investment companies (SBIC)
Post-money
No Shop/Confidentiality
14. 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
turnaround
bridge loans
Liquidation Preference
going private
15. Investments by a private equity fund in a publicly traded company - usually at a discount.
mezzanine financing
Post-Money Valuation
syndication
private investment in public equities (PIPE)
16. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Post-Money Valuation
capital gain
series a preferred stock
Liquidation Preference
17. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Anti-Dilution Protections
equity offerings
buyout
Limited Partner
18. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
PPM
Series A Preferred Stock
Term Sheet
19. 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
secondary purchase
Venture Capital Financing
venture capital
small business investment companies (SBIC)
20. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
C Corporation
Cash-out election
mezzanine financing
21. 'I will buy stock at price we negotiate'
Common Equity
Stock Price Agreement
lock-up period
Closing
22. How you get to vote
Voting Rights
return on investment (ROI)
going private
turnaround
23. 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.
Bridge Financing
small business investment companies (SBIC)
syndication
NDA (Non-disclosure agreement)
24. 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
Liquidation Preference
seed capital
return on investment (ROI)
venture capital
25. Assets are subject to double taxation - Unlimited number of investors
Elevator Pitch
bridge loans
C Corporation
Limited Partnership Agreement
26. Compound internal rate of return.
IRR
capital gain
IPO (Initial Public Offering)
Pre-money valuation
27. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Term Sheet
leverage buy-out(LBO)
management buy-in (MBI)
Internal Rate of Return
28. 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
closing
series a preferred stock
Limited Partner
recapitalization
29. 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.
recapitalization
return on investment (ROI)
Lead Investor
C Corporation
30. The amount of this available to a management team for venture investments.
capital under management
benchmarks
Limited Partnership Agreement
Restricted Stock
31. Date the LP's subscription is effective and they become partner
Pre-Money Valuation
Preferred Stock
Closing
Dividends
32. 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.
secondary public offering
Term Sheet
management buy-out (MBO)
mezzanine financing
33. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
mezzanine financing
General Partner (GP)
Initial Public Offering
Subordinated Debt
34. 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
going private
Capitalization Table
IPO(initial public offerings)
lock-up period
35. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Outstanding Stock
Deal Structure
Seed Money
36. The total value of the company immediately prior to the latest round of financing
institutional investors
Membership Interest
Pre-money valuation
Restricted Shares
37. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
Preferred Stock
fund of funds
Restricted Stock
38. 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
Conversion Rights
Bootstrapping
capital gain
debt financing
39. 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
Capitalization Table
Initial Public Offering
Book Value
capital gain
40. The way you buy stock
S Corporation
lead investor
management buy-out (MBO)
PPM
41. A study of the background and financial reliability of the company - management team and industry.
Internal Rate of Return
Pre-money valuation
Due Diligence
Liquidation Preference
42. The residual ownership in a company like a corporation or LLC 51%=control
Voting Rights
Equity
Deal Structure
Internal Rate of Return
43. 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
Warrants
Venture Capitalist
Restricted Shares
secondary purchase
44. 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
mezzanine financing
Book Value
Lead Investor
return on investment (ROI)
45. 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.
liquidation
Post-Money Valuation
Seed Money
exit
46. No double tax - Limited number of investors
Equity
debt financing
turnaround
S Corporation
47. 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
Pre-Money Valuation
Dividends
Common Stock
Equity
48. 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
Qualified IPO
Preferred Stock
management buy-out (MBO)
Elevator Pitch
49. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -
Liquidation Preference
Preferred Stock
Voting Rights
limited partnerships
50. 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
series a preferred stock
Cash-out election
Private Equity
Post-Money Valuation