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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. 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
leverage buy-out(LBO)
Business Plan
venture capital
seed capital
2. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
IPO(initial public offerings)
Capitalization Table
due diligence
corporate venturing
3. Don't talk to the market about the company
going private
Confidentiality
Capital Commitment
Pre-money valuation
4. The practice of a large company taking a minority equity position in a smaller company in a related field.
benchmarks
corporate venturing
Due Diligence
Conversion Rights
5. 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
Initial Public Offering
buyout
bridge loans
equity financing
6. 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.
Common Stock
minority enterprise small business investment companies (MESBICS)
C Corporation
syndication
7. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
venture capital
Warrants
secondary purchase
follow-on
8. 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.
Bridge Financing
private equity
Elevator Pitch
Voting Rights
9. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri
IPO (Initial Public Offering)
management buy-out (MBO)
Outstanding Stock
Deal Structure
10. 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
Common Stock
Common Equity
Senior Stock
Lead Investor
11. How you get to vote
management buy-out (MBO)
Corporation (Limited liability and taxation)
acquisition
Voting Rights
12. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
follow-on
secondary purchase
Common Equity
13. 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.
Outstanding Stock
IPO(initial public offerings)
Post-money
corporate venturing
14. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
S Corporation
C Corporation
Business Summary
Preferred Stock
15. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
IRR
venture capital
Liquidation Preference
16. 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.
series a preferred stock
buyout
portfolio compaay
management buy-out (MBO)
17. 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
private equity
Venture Capital Financing
Limited Partner
Due Diligence
18. 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
bridge loans
Business Plan
Membership Interest
corporate venturing
19. 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
small business investment companies (SBIC)
Warrants
S Corporation
benchmarks
20. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
capital gain
Equity
fund of funds
21. 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
General Partner (GP)
NDA (Non-disclosure agreement)
Liquidity Event
Preferred Stock
22. 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
23. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
acquisition
Closing
NDA (Non-disclosure agreement)
exit
24. 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
leverage buy-out(LBO)
Market Capitalization
Membership Interest
corporate venturing
25. 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.
Post-money
Bootstrapping
follow-on
Voting Rights
26. Assets are subject to double taxation - Unlimited number of investors
Post-Money Valuation
acquisition
C Corporation
Business Summary
27. The way you buy stock
secondary public offering
PPM
bridge loans
Deal Structure
28. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
mezzanine financing
Closing
Lead Investor
29. Selling an interest in your business to an outside party to raise money.
equity financing
seed capital
lead investor
closing
30. A business owned by stockholders who share in its profits but are not personally responsible for its debts
capital under management
Corporation (Limited liability and taxation)
seed capital
Limited Partnership Agreement
31. 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
Limited Partner
executive summary
PPM
raising capital
32. 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
equity offerings
capital gain
Seed Money
Venture Capitalist
33. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Capitalization Table
Anti-Dilution Protections
exit route
follow-on
34. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Common Stock
Corporation (Limited liability and taxation)
going private
35. 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.
limited partnerships
Membership Interest
going private
mezzanine financing
36. The method by which an investor will realize an investment.
private investment in public equities (PIPE)
exit route
Senior Stock
Closing
37. The equity ownership in a corporation. Also has basic voting rights
Pre-Money Valuation
Common Stock
Venture Capitalist
executive summary
38. 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) ...
Due Diligence
Closing
Initial Public Offering
S Corporation
39. No double tax - Limited number of investors
recapitalization
closing
S Corporation
Membership Interest
40. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Common Stock
NDA (Non-disclosure agreement)
Angel Financing
Adjusted Book Value
41. 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
corporate venturing
Bridge Financing
Venture Capital Financing
going private
42. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Post-Money Valuation
Conversion Rights
corporate venturing
equity financing
43. 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
limited partnerships
Subordinated Debt
Stock Price Agreement
Pre-Money Valuation
44. Investments by a private equity fund in a publicly traded company - usually at a discount.
Liquidity Event
private investment in public equities (PIPE)
venture capital
Dividends
45. 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
No Shop/Confidentiality
exit route
Common Stock
seed capital
46. 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
going private
Post-Money Valuation
equity offerings
syndication
47. 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.
lock-up period
Restricted Stock
Liquidation
Internal Rate of Return
48. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Post-Money Valuation
Stock Price Agreement
equity financing
Membership Interest
49. Compound internal rate of return.
seed capital
Preferred Stock
IRR
going private
50. The party that manages a limited partnership and is liable for the debts of the company
lock-up period
General Partner (GP)
No Shop/Confidentiality
private equity