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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 investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Venture Capitalist
capital under management
benchmarks
due diligence
2. 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.
Senior Stock
follow-on
raising capital
Pre-Money Valuation
3. Compound internal rate of return.
IRR
IPO (Initial Public Offering)
Capital Call 'Drawdown'
Burn Rate
4. 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
minority enterprise small business investment companies (MESBICS)
Restricted Shares
equity offerings
Senior Stock
5. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
small business investment companies (SBIC)
private equity
lead investor
6. 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.
Lead Investor
capital gain
Common Stock
lock-up period
7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Internal Rate of Return
Term Sheet
acquisition
equity offerings
8. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Common Equity
Capital
Business Summary
Warrants
9. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Bridge Financing
Post-Money Valuation
Liquidity Event
Corporation (Limited liability and taxation)
10. 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.
Qualified IPO
Liquidation Preference
syndication
capital under management
11. Document between general and limited partnership of each fund spells out details of the partnership.
return on investment (ROI)
Limited Partnership Agreement
private investment in public equities (PIPE)
recapitalization
12. 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
Business Summary
Capitalization Table
Dividends
limited partnerships
13. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Venture Capitalist
Anti-Dilution Protections
liquidation
Market Capitalization
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
turnaround
private investment in public equities (PIPE)
Capitalization Table
Preferred Stock
15. 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.
private investment in public equities (PIPE)
Post-money
Bridge Financing
exit route
16. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
leverage buy-out(LBO)
C Corporation
NDA (Non-disclosure agreement)
Subordinated Debt
17. 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
Outstanding Stock
exit route
Qualified IPO
Elevator Pitch
18. 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
Liquidation Preference
Deal Structure
liquidation
Venture Capitalist
19. 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.
acquisition
exit
Burn Rate
Bootstrapping
20. Don't talk to the market about the company
Capital Commitment
institutional investors
Confidentiality
liquidation
21. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Pre-Money Valuation
leverage buy-out(LBO)
Warrants
term sheet
22. Assets are subject to double taxation - Unlimited number of investors
Bootstrapping
Common Equity
Confidentiality
C Corporation
23. 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.
exit
Lead Investor
Anti-Dilution Protections
Venture Capital Financing
24. Selling an interest in your business to an outside party to raise money.
Business Plan
Capital Commitment
Restricted Stock
equity financing
25. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Voting Rights
General Partner (GP)
Bootstrapping
26. 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
buyout
executive summary
seed capital
portfolio compaay
27. 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.
Pre-money valuation
lead investor
management buy-out (MBO)
Pre-Money Valuation
28. 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
Pre-Money Valuation
debt financing
Adjusted Book Value
term sheet
29. Issue of shares of a company to the public by the company (directly) for the first time.
institutional investors
Conversion Rights
raising capital
IPO(initial public offerings)
30. 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
return on investment (ROI)
Market Capitalization
Warrants
Voting Rights
31. 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
benchmarks
corporate venturing
Capital Commitment
Stock Price Agreement
32. 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
Term Sheet
IPO (Initial Public Offering)
Post-Money Valuation
going private
33. The party that manages a limited partnership and is liable for the debts of the company
Membership Interest
Dividends
General Partner (GP)
exit route
34. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
acquisition
Conversion Rights
Limited Partnership Agreement
secondary public offering
35. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
Deal Structure
Series A Preferred Stock
Post-Money Valuation
36. 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
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.
Warrants
due diligence
acquisition
mezzanine financing
38. An IPO that has met certain
Subordinated Debt
Qualified IPO
C Corporation
Due Diligence
39. 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
Private Equity
Senior Stock
bridge loans
Pre-Money Valuation
40. This refers to obtaining capital from investors or venture capital sources.
portfolio compaay
return on investment (ROI)
raising capital
series a preferred stock
41. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
raising capital
Senior Stock
syndication
buyout
42. 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.
management buy-in (MBI)
Voting Rights
recapitalization
lead investor
43. How you get out
Restricted Stock
corporate venturing
Book Value
Liquidation Preference
44. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
IRR
Closing
angel investors
Qualified IPO
45. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
exit
minority enterprise small business investment companies (MESBICS)
Capitalization Table
46. Letter of intent summarizing the key legal and financial terms
syndication
Liquidation Preference
Seed Money
Term Sheet
47. 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.
liquidation
private investment in public equities (PIPE)
executive summary
term sheet
48. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Common Stock
NDA (Non-disclosure agreement)
IPO(initial public offerings)
49. Cannot get other outside investors-No Shop
Term Sheet
corporate venturing
No Shop/Confidentiality
Market Capitalization
50. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Cash-out election
Limited Partner
Limited Partnership Agreement
Subordinated Debt