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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 value at which an asset is carried on a balance sheet (the cost of the item)
management buy-out (MBO)
Elevator Pitch
Book Value
capital gain
2. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
Subordinated Debt
mezzanine financing
Venture Capital Financing
3. How much the company is worth before an investment
Liquidation
Pre-Money Valuation
capital under management
Dividends
4. 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
Internal Rate of Return
Bootstrapping
executive summary
5. Letter of intent summarizing the key legal and financial terms
portfolio compaay
Term Sheet
Post-Money Valuation
Common Equity
6. 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
Preferred Stock
syndication
capital under management
private equity
7. 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
S Corporation
follow-on
Senior Stock
8. Document between general and limited partnership of each fund spells out details of the partnership.
secondary purchase
Limited Partnership Agreement
management buy-in (MBI)
Conversion Rights
9. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
Capitalization Table
Adjusted Book Value
Capital Call 'Drawdown'
10. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Venture Capitalist
NDA (Non-disclosure agreement)
Capital Call 'Drawdown'
11. 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
Preferred Stock
Restricted Shares
Pre-Money Valuation
Private Equity
12. 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
IPO(initial public offerings)
corporate venturing
Initial Public Offering
Lead Investor
13. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
Restricted Shares
turnaround
Liquidation
14. 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.
Elevator Pitch
Deal Structure
Seed Money
Internal Rate of Return
15. The amount of this available to a management team for venture investments.
capital under management
Liquidation Preference
Restricted Stock
Stock Price Agreement
16. 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.
lock-up period
Common Stock
Preferred Stock
liquidation
17. The total value of the company immediately prior to the latest round of financing
management buy-out (MBO)
Pre-money valuation
Stock Price Agreement
Venture Capital Financing
18. The party that manages a limited partnership and is liable for the debts of the company
follow-on
institutional investors
General Partner (GP)
Anti-Dilution Protections
19. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
PPM
raising capital
Dividends
20. 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
Preferred Stock
equity offerings
Confidentiality
recapitalization
21. 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) ...
Common Equity
Restricted Shares
due diligence
Initial Public Offering
22. 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.
portfolio compaay
equity offerings
Post-Money Valuation
acquisition
23. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Lead Investor
Pre-money valuation
Membership Interest
Voting Rights
24. 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
Membership Interest
Venture Capitalist
series a preferred stock
S Corporation
25. 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.
Business Plan
lead investor
corporate venturing
Deal Structure
26. The residual ownership in a company like a corporation or LLC 51%=control
Equity
fund of funds
management buy-out (MBO)
term sheet
27. 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
small business investment companies (SBIC)
angel investors
Book Value
Liquidation Preference
28. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Subordinated Debt
private equity
Book Value
29. The equity ownership in a corporation. Also has basic voting rights
Adjusted Book Value
Private Equity
Burn Rate
Common Stock
30. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
Warrants
corporate venturing
Pre-money valuation
31. 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
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32. 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.
Lead Investor
Bridge Financing
PPM
Due Diligence
33. An IPO that has met certain
Qualified IPO
Subordinated Debt
Liquidation
Bootstrapping
34. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
executive summary
capital gain
Pre-Money Valuation
Cash-out election
35. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
return on investment (ROI)
Capital Call 'Drawdown'
Conversion Rights
Common Equity
36. 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
raising capital
IPO (Initial Public Offering)
Venture Capitalist
acquisition
37. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
Venture Capital Financing
Restricted Shares
Bridge Financing
Venture Capitalist
38. Date the LP's subscription is effective and they become partner
Pre-Money Valuation
seed capital
Warrants
Closing
39. 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
Market Capitalization
Business Plan
Dividends
Capitalization Table
40. 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
exit route
seed capital
benchmarks
Dividends
41. No double tax - Limited number of investors
venture capital
fund of funds
S Corporation
IPO (Initial Public Offering)
42. How you get to vote
S Corporation
Voting Rights
Capital
management buy-in (MBI)
43. 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.
Due Diligence
management buy-out (MBO)
mezzanine financing
Liquidation Preference
44. 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
Restricted Shares
Elevator Pitch
Warrants
PPM
45. The company or entity into which a fund invests directly.
Capitalization Table
portfolio compaay
Adjusted Book Value
venture capital
46. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
management buy-in (MBI)
secondary purchase
Pre-Money Valuation
Venture Capitalist
47. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
Limited Partner
exit route
return on investment (ROI)
48. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Pre-money valuation
Burn Rate
Business Summary
exit
49. 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.
Anti-Dilution Protections
Liquidation Preference
Preferred Stock
recapitalization
50. Don't talk to the market about the company
benchmarks
bridge loans
angel investors
Confidentiality