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






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






3. 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.






4. The internal rate of return on an investment.






5. 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.






6. The equity ownership in a corporation. Also has basic voting rights






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






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






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






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






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






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






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






14. How you get to vote






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






16. The way you buy stock






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






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






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






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






21. 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






22. 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.






23. 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.






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






25. 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






26. 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






27. 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






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






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






30. 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






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






32. 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.






33. 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






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






35. 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






36. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






37. 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.






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






39. 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.






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






41. 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






42. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






43. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






44. 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






45. 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.






46. 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






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






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






49. 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






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