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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. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
capital gain
Capital Commitment
private investment in public equities (PIPE)
management buy-in (MBI)
2. 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
Capital Commitment
S Corporation
capital gain
series a preferred stock
3. 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
secondary purchase
Conversion Rights
Elevator Pitch
Bridge Financing
4. This refers to obtaining capital from investors or venture capital sources.
PPM
General Partner (GP)
Burn Rate
raising capital
5. The amount of this available to a management team for venture investments.
private equity
term sheet
exit
capital under management
6. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Membership Interest
angel investors
Confidentiality
private equity
7. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Limited Partner
Liquidity Event
General Partner (GP)
Warrants
8. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
venture capital
Venture Capital Financing
General Partner (GP)
9. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
lead investor
equity offerings
venture capital
exit route
10. 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.
private investment in public equities (PIPE)
Post-money
lock-up period
raising capital
11. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Confidentiality
minority enterprise small business investment companies (MESBICS)
capital gain
Restricted Shares
12. 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
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13. Don't talk to the market about the company
Confidentiality
Membership Interest
lock-up period
angel investors
14. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Voting Rights
Common Stock
Post-Money Valuation
Liquidation
15. 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.
No Shop/Confidentiality
Subordinated Debt
liquidation
exit
16. 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
Venture Capital Financing
Restricted Shares
Subordinated Debt
17. 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
Preferred Stock
bridge loans
Series A Preferred Stock
Seed Money
18. 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
Liquidation Preference
Term Sheet
Series A Preferred Stock
follow-on
19. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
Bridge Financing
Cash-out election
Business Summary
20. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Stock Price Agreement
capital under management
Closing
Common Equity
21. 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.
portfolio compaay
Venture Capital Financing
Market Capitalization
Adjusted Book Value
22. 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
Liquidity Event
venture capital
leverage buy-out(LBO)
Subordinated Debt
23. 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.
series a preferred stock
Angel Financing
Liquidation Preference
secondary public offering
24. An investment vehicle designed to invest in a diversified group of investment funds.
Seed Money
follow-on
secondary purchase
fund of funds
25. 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.
Venture Capital Financing
equity financing
Deal Structure
No Shop/Confidentiality
26. 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.
term sheet
fund of funds
S Corporation
Bridge Financing
27. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Anti-Dilution Protections
private investment in public equities (PIPE)
Market Capitalization
management buy-out (MBO)
28. The method by which an investor will realize an investment.
Limited Partnership Agreement
exit route
Adjusted Book Value
Capital Call 'Drawdown'
29. 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
General Partner (GP)
Common Stock
Business Plan
IPO (Initial Public Offering)
30. Document between general and limited partnership of each fund spells out details of the partnership.
Pre-Money Valuation
Limited Partnership Agreement
IRR
Voting Rights
31. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
Term Sheet
return on investment (ROI)
Lead Investor
32. The equity ownership in a corporation. Also has basic voting rights
No Shop/Confidentiality
Common Stock
angel investors
IRR
33. 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.
secondary public offering
mezzanine financing
acquisition
Limited Partner
34. 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
Market Capitalization
Preferred Stock
Liquidation
Post-Money Valuation
35. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Closing
Liquidity Event
Deal Structure
fund of funds
36. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet
Cash-out election
Pre-money valuation
Deal Structure
Dividends
37. The rate at which a company expends net cash over a certain period - usually a month.
fund of funds
Burn Rate
management buy-in (MBI)
Confidentiality
38. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Anti-Dilution Protections
Senior Stock
leverage buy-out(LBO)
Venture Capitalist
39. Term sheet for equity offering
exit
Term Sheet
Pre-money valuation
Private Equity
40. 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) ...
capital gain
Initial Public Offering
syndication
C Corporation
41. 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
Liquidation Preference
secondary purchase
benchmarks
return on investment (ROI)
42. 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
Common Equity
Internal Rate of Return
Private Equity
bridge loans
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.
IPO (Initial Public Offering)
going private
due diligence
turnaround
44. The maximum amount of cash that a partner is required to contribute under the terms
mezzanine financing
seed capital
Capital Commitment
exit
45. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Corporation (Limited liability and taxation)
Business Plan
Limited Partnership Agreement
corporate venturing
46. Pre-money valuation plus the amount invested in the latest round
management buy-in (MBI)
IPO (Initial Public Offering)
Post-money
equity offerings
47. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Cash-out election
Membership Interest
NDA (Non-disclosure agreement)
Capital Commitment
48. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
secondary public offering
Business Summary
closing
49. 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
PPM
benchmarks
Preferred Stock
liquidation
50. A study of the background and financial reliability of the company - management team and industry.
Post-money
Capital Commitment
IRR
Due Diligence