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. 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






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






3. Assets are subject to double taxation - Unlimited number of investors






4. 'I will buy stock at price we negotiate'






5. 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) ...






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






7. 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






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.






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






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






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






12. 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.






13. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






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






15. Compound internal rate of return.






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






17. 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






18. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






20. An IPO that has met certain






21. Term sheet for equity offering






22. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






23. No double tax - Limited number of investors






24. 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






25. 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.






26. 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.






27. 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






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






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






30. How much the company is worth before an investment






31. Document between general and limited partnership of each fund spells out details of the partnership.






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






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






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






35. 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 -






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






37. 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






38. 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






39. 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


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






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






42. 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






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






44. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






45. 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.).






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






47. 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






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






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






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