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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 way you buy stock
PPM
Business Summary
Warrants
Preferred Stock
2. A security with limits on its transferability. Usually issued in connection with a private placement
fund of funds
series a preferred stock
Restricted Stock
Corporation (Limited liability and taxation)
3. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Dividends
bridge loans
Pre-Money Valuation
4. Compound internal rate of return.
General Partner (GP)
IRR
exit route
Common Equity
5. 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
capital under management
small business investment companies (SBIC)
Common Stock
6. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
General Partner (GP)
NDA (Non-disclosure agreement)
Business Plan
secondary public offering
7. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
mezzanine financing
equity financing
Qualified IPO
8. This refers to obtaining capital from investors or venture capital sources.
Dividends
Warrants
Liquidation
raising capital
9. 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
Business Plan
bridge loans
equity financing
Voting Rights
10. 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
Limited Partner
follow-on
Business Plan
Series A Preferred Stock
11. 'I will buy stock at price we negotiate'
secondary purchase
Stock Price Agreement
Book Value
mezzanine financing
12. Issue of shares of a company to the public by the company (directly) for the first time.
recapitalization
leverage buy-out(LBO)
IPO(initial public offerings)
buyout
13. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Pre-money valuation
Subordinated Debt
exit
private investment in public equities (PIPE)
14. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.
turnaround
Deal Structure
Restricted Stock
due diligence
15. 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
exit route
Pre-money valuation
capital under management
16. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Preferred Stock
Senior Stock
angel investors
IRR
17. 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
Common Stock
mezzanine financing
Limited Partner
liquidation
18. 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
minority enterprise small business investment companies (MESBICS)
PPM
Business Plan
Elevator Pitch
19. 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.
Liquidation Preference
exit
minority enterprise small business investment companies (MESBICS)
Term Sheet
20. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
institutional investors
leverage buy-out(LBO)
Outstanding Stock
Subordinated Debt
21. 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
limited partnerships
Lead Investor
Outstanding Stock
venture capital
22. 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
Pre-money valuation
series a preferred stock
Capital Call 'Drawdown'
Dividends
23. 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
seed capital
IRR
Private Equity
due diligence
24. 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
Limited Partnership Agreement
follow-on
Warrants
25. The rate at which a company expends net cash over a certain period - usually a month.
Post-Money Valuation
Business Plan
Venture Capitalist
Burn Rate
26. Document between general and limited partnership of each fund spells out details of the partnership.
Limited Partnership Agreement
seed capital
liquidation
mezzanine financing
27. 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
Voting Rights
private equity
seed capital
executive summary
28. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
debt financing
Angel Financing
Membership Interest
Common Stock
29. 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
bridge loans
Series A Preferred Stock
Business Plan
liquidation
30. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Liquidation Preference
fund of funds
turnaround
31. 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.
Liquidation Preference
management buy-out (MBO)
Internal Rate of Return
secondary purchase
32. 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
Dividends
capital under management
buyout
Common Stock
33. 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
Conversion Rights
Limited Partner
IPO(initial public offerings)
Seed Money
34. 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.
Confidentiality
raising capital
Dividends
term sheet
35. How you get out
Series A Preferred Stock
IPO(initial public offerings)
Liquidation Preference
closing
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. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
Equity
acquisition
Liquidation Preference
38. 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
Internal Rate of Return
Cash-out election
Lead Investor
leverage buy-out(LBO)
39. The equity ownership in a corporation. Also has basic voting rights
Limited Partner
Common Stock
institutional investors
Adjusted Book Value
40. Cannot get other outside investors-No Shop
No Shop/Confidentiality
private investment in public equities (PIPE)
Equity
Burn Rate
41. 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
executive summary
NDA (Non-disclosure agreement)
closing
Private Equity
42. 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 -
private equity
limited partnerships
portfolio compaay
Common Equity
43. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.
corporate venturing
Confidentiality
turnaround
Common Equity
44. Date the LP's subscription is effective and they become partner
IRR
Closing
Pre-money valuation
small business investment companies (SBIC)
45. Term sheet for equity offering
Term Sheet
Bootstrapping
Liquidity Event
limited partnerships
46. Investments by a private equity fund in a publicly traded company - usually at a discount.
No Shop/Confidentiality
Cash-out election
private investment in public equities (PIPE)
equity financing
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
Membership Interest
due diligence
Term Sheet
48. 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
Pre-Money Valuation
management buy-in (MBI)
capital gain
49. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Seed Money
Adjusted Book Value
Stock Price Agreement
secondary purchase
50. 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
PPM
Subordinated Debt