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. 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






2. 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.






3. 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.






4. 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) ...






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






6. How much the company is worth before an investment






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






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






9. 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.






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






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






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






13. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






14. 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






15. 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






16. No double tax - Limited number of investors






17. 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.






18. Investments by a private equity fund in a publicly traded company - usually at a discount.






19. 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.






20. 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.






21. How you get out






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






23. 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






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






25. The residual ownership in a company like a corporation or LLC 51%=control






26. Compound internal rate of return.






27. 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






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






29. 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






30. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






31. 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.






32. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






33. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






34. The way you buy stock






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






36. 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






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






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






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






40. 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






41. 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






42. 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.






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






44. A study of the background and financial reliability of the company - management team and industry.






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






46. 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






47. The total value of the company immediately prior to the latest round of financing






48. 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






49. 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






50. 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