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 company or entity into which a fund invests directly.






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






3. 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.).






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






5. Term sheet for equity offering






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






7. 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






8. 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






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






10. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






11. 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






12. 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






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






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






15. How you get out






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






17. No double tax - Limited number of investors






18. The way you buy stock






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






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






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






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






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






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






25. 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






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






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






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






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






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






31. 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






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






33. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






34. 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






35. 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.






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






37. 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.






38. Compound internal rate of return.






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






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






41. 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






42. 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






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






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






45. 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






46. 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






47. 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






48. The internal rate of return on an investment.






49. 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






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