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






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. Compound internal rate of return.






4. 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






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






6. 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.






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






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






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






10. 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.






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






12. 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






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






14. 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






15. 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.






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






17. 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






18. 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






19. 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.






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






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






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






23. 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.






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






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






26. 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






27. 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.






28. 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






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






30. 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






31. 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






32. 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






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






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






36. 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


37. 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.






38. An IPO that has met certain






39. 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






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






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






42. 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.






43. How you get out






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






45. The rate of return or profit that an investment is expected to earn.






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






47. 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.






48. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






49. Cannot get other outside investors-No Shop






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