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






2. 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.






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






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






5. 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






6. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






7. 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.






8. An IPO that has met certain






9. 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






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






11. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






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






14. 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






15. 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.






16. 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






17. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






19. 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.






20. 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






21. Cannot get other outside investors-No Shop






22. 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






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.






24. 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.






25. 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






26. 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






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






28. The rate of return or profit that an investment is expected to earn.






29. 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






30. 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.






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






32. 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






33. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






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






35. 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






36. 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.






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






38. 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.






39. 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.






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






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






42. No double tax - Limited number of investors






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






44. 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






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






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






47. Assets are subject to double taxation - Unlimited number of investors






48. 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






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






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