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. An IPO that has met certain






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






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






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






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






6. 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) ...






7. 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.






8. 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






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






10. 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.






11. 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






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






13. 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.






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






15. 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






16. 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.






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. 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.






19. 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






20. 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






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






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






23. 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 -






24. 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






25. The rate at which a company expends net cash over a certain period - usually a month.






26. How you get out






27. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






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






29. 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






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






31. 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






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






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






35. Cannot get other outside investors-No Shop






36. The internal rate of return on an investment.






37. 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






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






39. 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






40. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).






41. No double tax - Limited number of investors






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






43. 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






44. This refers to obtaining capital from investors or venture capital sources.






45. 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.






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






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






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






49. The practice of a large company taking a minority equity position in a smaller company in a related field.






50. The company or entity into which a fund invests directly.