Test your basic knowledge |

Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






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






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






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






5. 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






6. 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


7. 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 -






8. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






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






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






11. 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






12. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.






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






14. 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






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






16. The way you buy stock






17. 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






18. An IPO that has met certain






19. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






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






21. 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






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






23. How you get out






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






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






26. 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.).






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






28. How much the company is worth before an investment






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






30. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






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






32. 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






33. 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.






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






35. Issue of shares of a company to the public by the company (directly) for the first time.






36. 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






37. 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.






38. 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






39. 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.






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






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






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






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






45. How you get to vote






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






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






48. 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






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






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