Test your basic knowledge |

Venture Capital

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 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.






2. 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.






3. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






4. This refers to obtaining capital from investors or venture capital sources.






5. Pre-money valuation plus the amount invested in the latest round






6. How you get to vote






7. A business owned by stockholders who share in its profits but are not personally responsible for its debts






8. 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 -






9. 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.






10. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






12. 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.






13. The value at which an asset is carried on a balance sheet (the cost of the item)






14. 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






15. The residual ownership in a company like a corporation or LLC 51%=control






16. 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






17. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






18. 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.






19. The method by which an investor will realize an investment.






20. The total value of the company immediately prior to the latest round of financing






21. 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






22. 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






23. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






24. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






25. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






26. A security with limits on its transferability. Usually issued in connection with a private placement






27. 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.






28. 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.






29. Don't talk to the market about the company






30. 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


31. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






32. How you get out






33. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






34. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






35. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






36. 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.).






37. 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






38. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






39. An IPO that has met certain






40. A study of the background and financial reliability of the company - management team and industry.






41. Issue of shares of a company to the public by the company (directly) for the first time.






42. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






43. Cannot get other outside investors-No Shop






44. 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






45. The way you buy stock






46. An investment vehicle designed to invest in a diversified group of investment funds.






47. The rate at which a company expends net cash over a certain period - usually a month.






48. 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






49. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.






50. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares