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






2. How you get out






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






4. 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






5. 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.






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






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






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






9. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






10. 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.






11. 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.






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






13. 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.).






14. 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






15. 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






16. 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






17. How much the company is worth before an investment






18. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






19. Cannot get other outside investors-No Shop






20. 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






21. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






22. Date the LP's subscription is effective and they become partner






23. A security with limits on its transferability. Usually issued in connection with a private placement






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. 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






26. 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.






27. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






28. 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.






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






30. 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






31. The method by which an investor will realize an investment.






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






33. 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






34. 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






35. 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






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






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






38. 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.






39. 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






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






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






42. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






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






44. Term sheet for equity offering






45. Compound internal rate of return.






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






47. 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.






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






49. 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






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