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






2. 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






3. 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






4. 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.






5. 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.






6. 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


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






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






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






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






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






12. Cannot get other outside investors-No Shop






13. 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






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






15. 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.






16. 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.






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






18. 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






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






20. 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






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






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






23. 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.






24. 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






25. 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.






26. 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






27. 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.






28. 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






29. No double tax - Limited number of investors






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






31. 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






32. 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 -






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






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






35. An IPO that has met certain






36. 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






37. 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.






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






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






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






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






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






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






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






45. The company or entity into which a fund invests directly.






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






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






48. 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.






49. 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






50. 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