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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 maximum amount of cash that a partner is required to contribute under the terms
Preferred Stock
private investment in public equities (PIPE)
Capital Commitment
General Partner (GP)
2. 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
Capitalization Table
buyout
private equity
closing
3. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
term sheet
C Corporation
S Corporation
4. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Dividends
Outstanding Stock
follow-on
5. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Venture Capitalist
Confidentiality
Membership Interest
6. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Adjusted Book Value
lead investor
Senior Stock
executive summary
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 -
return on investment (ROI)
exit
limited partnerships
fund of funds
8. 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.
Elevator Pitch
liquidation
Deal Structure
PPM
9. The equity ownership in a corporation. Also has basic voting rights
exit route
Common Stock
equity financing
turnaround
10. An investment vehicle designed to invest in a diversified group of investment funds.
capital under management
No Shop/Confidentiality
Venture Capital Financing
fund of funds
11. 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
going private
recapitalization
C Corporation
Adjusted Book Value
12. An IPO that has met certain
institutional investors
buyout
Limited Partner
Qualified IPO
13. 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.
C Corporation
lock-up period
PPM
Equity
14. 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
Outstanding Stock
fund of funds
Market Capitalization
Limited Partnership Agreement
15. 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.
follow-on
S Corporation
lock-up period
General Partner (GP)
16. Assets are subject to double taxation - Unlimited number of investors
IPO (Initial Public Offering)
Senior Stock
Series A Preferred Stock
C Corporation
17. How you get to vote
Term Sheet
Venture Capital Financing
exit route
Voting Rights
18. Cannot get other outside investors-No Shop
institutional investors
portfolio compaay
No Shop/Confidentiality
Elevator Pitch
19. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
Capital Call 'Drawdown'
recapitalization
IPO (Initial Public Offering)
20. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
IPO (Initial Public Offering)
Voting Rights
Restricted Stock
Conversion Rights
21. 'I will buy stock at price we negotiate'
management buy-out (MBO)
Stock Price Agreement
Common Stock
Capital Call 'Drawdown'
22. The company or entity into which a fund invests directly.
Business Plan
portfolio compaay
angel investors
Capital Commitment
23. Letter of intent summarizing the key legal and financial terms
No Shop/Confidentiality
Term Sheet
limited partnerships
acquisition
24. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
minority enterprise small business investment companies (MESBICS)
Dividends
Post-money
25. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Elevator Pitch
leverage buy-out(LBO)
Restricted Stock
NDA (Non-disclosure agreement)
26. 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
Restricted Stock
Elevator Pitch
private equity
capital gain
27. Date the LP's subscription is effective and they become partner
executive summary
Closing
due diligence
Lead Investor
28. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
capital under management
Corporation (Limited liability and taxation)
Business Summary
29. Pre-money valuation plus the amount invested in the latest round
Post-Money Valuation
closing
Pre-money valuation
Post-money
30. 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
Post-Money Valuation
Adjusted Book Value
Capital Commitment
31. 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.
Due Diligence
syndication
Corporation (Limited liability and taxation)
going private
32. 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.).
Subordinated Debt
secondary purchase
institutional investors
portfolio compaay
33. Don't talk to the market about the company
management buy-out (MBO)
Term Sheet
term sheet
Confidentiality
34. 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
portfolio compaay
Deal Structure
going private
Series A Preferred Stock
35. 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.
Business Plan
Stock Price Agreement
Bootstrapping
Bridge Financing
36. The party that manages a limited partnership and is liable for the debts of the company
Common Stock
Pre-Money Valuation
bridge loans
General Partner (GP)
37. This refers to a synopsis of the key points of a business plan.
executive summary
Bridge Financing
equity financing
term sheet
38. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Term Sheet
Warrants
lock-up period
management buy-in (MBI)
39. 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
mezzanine financing
Market Capitalization
Liquidation Preference
capital under management
40. 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.
equity offerings
minority enterprise small business investment companies (MESBICS)
Cash-out election
term sheet
41. This refers to obtaining capital from investors or venture capital sources.
Capitalization Table
Post-money
raising capital
IRR
42. Document between general and limited partnership of each fund spells out details of the partnership.
Angel Financing
PPM
bridge loans
Limited Partnership Agreement
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
Private Equity
Pre-Money Valuation
term sheet
Internal Rate of Return
44. 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
corporate venturing
private equity
capital gain
acquisition
45. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Restricted Stock
Membership Interest
Anti-Dilution Protections
46. 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
liquidation
Outstanding Stock
debt financing
executive summary
47. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
turnaround
Due Diligence
Adjusted Book Value
Limited Partnership Agreement
48. 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
Elevator Pitch
debt financing
Dividends
capital under management
49. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
debt financing
Common Stock
Capital Call 'Drawdown'
50. 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
Qualified IPO
equity offerings
Common Stock
equity financing