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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






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






3. The maximum amount of cash that a partner is required to contribute under the terms






4. 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






5. 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






6. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






7. 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.






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. 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.






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






11. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






12. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






13. This refers to a synopsis of the key points of a business plan.






14. Selling an interest in your business to an outside party to raise money.






15. 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.






16. 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






17. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






18. 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






19. Cannot get other outside investors-No Shop






20. The amount of this available to a management team for venture investments.






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






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






23. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






24. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.






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






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






27. 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






28. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






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






31. 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.






32. The equity ownership in a corporation. Also has basic voting rights






33. Letter of intent summarizing the key legal and financial terms






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






35. The party that manages a limited partnership and is liable for the debts of the company






36. 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.






37. How you get out






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






39. 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






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






41. How much the company is worth before an investment






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






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






44. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






45. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






47. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






48. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






49. Investments by a private equity fund in a publicly traded company - usually at a discount.






50. Date the LP's subscription is effective and they become partner