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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. 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.
management buy-in (MBI)
Due Diligence
Adjusted Book Value
secondary public offering
2. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
General Partner (GP)
Senior Stock
Anti-Dilution Protections
venture capital
3. 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
Corporation (Limited liability and taxation)
Elevator Pitch
Burn Rate
4. 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
Common Equity
debt financing
Due Diligence
small business investment companies (SBIC)
5. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
C Corporation
No Shop/Confidentiality
General Partner (GP)
equity offerings
6. Letter of intent summarizing the key legal and financial terms
leverage buy-out(LBO)
Due Diligence
series a preferred stock
Term Sheet
7. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
Membership Interest
capital under management
institutional investors
8. 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
9. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
term sheet
Series A Preferred Stock
raising capital
Membership Interest
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.
Conversion Rights
equity financing
Common Stock
management buy-out (MBO)
11. A security with limits on its transferability. Usually issued in connection with a private placement
exit
Pre-Money Valuation
raising capital
Restricted Stock
12. 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
Due Diligence
bridge loans
capital gain
C Corporation
13. The equity ownership in a corporation. Also has basic voting rights
Capitalization Table
Common Stock
exit route
secondary public offering
14. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
General Partner (GP)
exit
Common Equity
Bridge Financing
15. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
No Shop/Confidentiality
Conversion Rights
Outstanding Stock
16. 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) ...
Anti-Dilution Protections
Preferred Stock
management buy-out (MBO)
Initial Public Offering
17. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
minority enterprise small business investment companies (MESBICS)
Senior Stock
Preferred Stock
Anti-Dilution Protections
18. 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.
capital under management
C Corporation
acquisition
Venture Capital Financing
19. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.
Angel Financing
follow-on
term sheet
Bootstrapping
20. The total value of the company immediately prior to the latest round of financing
portfolio compaay
Confidentiality
Pre-money valuation
Post-money
21. 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.
Anti-Dilution Protections
Lead Investor
NDA (Non-disclosure agreement)
mezzanine financing
22. 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
secondary purchase
Common Stock
Private Equity
General Partner (GP)
23. 'I will buy stock at price we negotiate'
Restricted Shares
leverage buy-out(LBO)
Stock Price Agreement
General Partner (GP)
24. 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
closing
No Shop/Confidentiality
venture capital
series a preferred stock
25. The amount of this available to a management team for venture investments.
Seed Money
capital under management
Venture Capitalist
Pre-money valuation
26. Cannot get other outside investors-No Shop
Preferred Stock
due diligence
No Shop/Confidentiality
IPO(initial public offerings)
27. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
institutional investors
Common Equity
venture capital
28. 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.
Membership Interest
bridge loans
private investment in public equities (PIPE)
Preferred Stock
29. 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
Deal Structure
liquidation
Preferred Stock
IRR
30. The practice of a large company taking a minority equity position in a smaller company in a related field.
benchmarks
secondary purchase
IPO (Initial Public Offering)
corporate venturing
31. Compound internal rate of return.
IRR
bridge loans
management buy-out (MBO)
portfolio compaay
32. The way you buy stock
private investment in public equities (PIPE)
PPM
mezzanine financing
No Shop/Confidentiality
33. The party that manages a limited partnership and is liable for the debts of the company
angel investors
General Partner (GP)
private equity
Conversion Rights
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
Conversion Rights
secondary public offering
Pre-money valuation
capital gain
35. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
buyout
Warrants
benchmarks
capital under management
36. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Pre-money valuation
Senior Stock
due diligence
IPO(initial public offerings)
37. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Capitalization Table
Elevator Pitch
Liquidation Preference
38. This refers to a synopsis of the key points of a business plan.
Restricted Shares
Deal Structure
benchmarks
executive summary
39. 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
secondary purchase
Initial Public Offering
Deal Structure
40. Assets are subject to double taxation - Unlimited number of investors
executive summary
C Corporation
IRR
Pre-Money Valuation
41. The rate of return or profit that an investment is expected to earn.
follow-on
seed capital
secondary purchase
Internal Rate of Return
42. 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.
Adjusted Book Value
benchmarks
capital under management
syndication
43. A study of the background and financial reliability of the company - management team and industry.
Stock Price Agreement
Term Sheet
Warrants
Due Diligence
44. 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
No Shop/Confidentiality
Outstanding Stock
liquidation
Post-Money Valuation
45. How you get to vote
Voting Rights
private investment in public equities (PIPE)
Qualified IPO
IRR
46. How much the company is worth before an investment
series a preferred stock
Post-money
private investment in public equities (PIPE)
Pre-Money Valuation
47. 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.
Capitalization Table
Due Diligence
recapitalization
Venture Capital Financing
48. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
leverage buy-out(LBO)
secondary purchase
Preferred Stock
series a preferred stock
49. 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)
Outstanding Stock
Internal Rate of Return
portfolio compaay
50. 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.).
liquidation
leverage buy-out(LBO)
institutional investors
angel investors