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






2. 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






3. 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.






4. 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.).






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






6. 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.






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






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






9. 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.






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






11. The way you buy stock






12. 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






13. No double tax - Limited number of investors






14. 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






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






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






17. 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.






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






19. 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.






20. 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) ...






21. 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.






22. 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






23. How much the company is worth before an investment






24. How you get out






25. Term sheet for equity offering






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






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






28. 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 -






29. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






30. 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






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






32. 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






33. 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.






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






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






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






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






39. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






40. 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






41. 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.






42. How you get to vote






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






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






45. 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






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






47. 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.






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






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






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