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Test your basic knowledge |
Venture Capital
Start Test
Study First
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. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Term Sheet
Outstanding Stock
limited partnerships
Conversion Rights
2. 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
Preferred Stock
Anti-Dilution Protections
portfolio compaay
debt financing
3. The amount of this available to a management team for venture investments.
Book Value
Qualified IPO
portfolio compaay
capital under management
4. 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
equity offerings
Common Stock
Private Equity
Pre-Money Valuation
5. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
syndication
liquidation
seed capital
6. 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
secondary purchase
Common Stock
mezzanine financing
debt financing
7. An IPO that has met certain
Due Diligence
Lead Investor
executive summary
Qualified IPO
8. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Preferred Stock
S Corporation
angel investors
due diligence
9. 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
Restricted Shares
IRR
venture capital
Post-money
10. 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.
series a preferred stock
Internal Rate of Return
lead investor
turnaround
11. The method by which an investor will realize an investment.
Preferred Stock
equity offerings
Pre-Money Valuation
exit route
12. 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.
Bridge Financing
exit
Term Sheet
Closing
13. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Equity
Pre-Money Valuation
angel investors
Dividends
14. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
IPO (Initial Public Offering)
Outstanding Stock
closing
Senior Stock
15. 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
recapitalization
Stock Price Agreement
bridge loans
Anti-Dilution Protections
16. Don't talk to the market about the company
due diligence
Confidentiality
Book Value
executive summary
17. 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.
benchmarks
venture capital
term sheet
Deal Structure
18. 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
S Corporation
syndication
seed capital
return on investment (ROI)
19. 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
Market Capitalization
executive summary
bridge loans
Equity
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) ...
General Partner (GP)
Capitalization Table
Initial Public Offering
Stock Price Agreement
21. Document between general and limited partnership of each fund spells out details of the partnership.
Post-money
Seed Money
NDA (Non-disclosure agreement)
Limited Partnership Agreement
22. 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.
Internal Rate of Return
Initial Public Offering
Membership Interest
syndication
23. 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
private equity
bridge loans
series a preferred stock
Qualified IPO
24. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Venture Capital Financing
Membership Interest
Subordinated Debt
Term Sheet
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
Common Equity
Preferred Stock
closing
going private
26. 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.
executive summary
management buy-out (MBO)
due diligence
capital gain
27. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Liquidity Event
Conversion Rights
Outstanding Stock
Preferred Stock
28. This refers to obtaining capital from investors or venture capital sources.
raising capital
closing
term sheet
Pre-Money Valuation
29. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
fund of funds
liquidation
Qualified IPO
30. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
series a preferred stock
mezzanine financing
buyout
Common Stock
31. How you get out
Closing
institutional investors
limited partnerships
Liquidation Preference
32. 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.
liquidation
NDA (Non-disclosure agreement)
Liquidity Event
acquisition
33. Partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment
Corporation (Limited liability and taxation)
Due Diligence
Limited Partner
IPO (Initial Public Offering)
34. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Burn Rate
private investment in public equities (PIPE)
Seed Money
35. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
institutional investors
Closing
mezzanine financing
36. Selling an interest in your business to an outside party to raise money.
equity financing
raising capital
angel investors
IRR
37. 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.
No Shop/Confidentiality
angel investors
lock-up period
Liquidation
38. 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
venture capital
Business Plan
Post-money
PPM
39. 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.
private investment in public equities (PIPE)
capital under management
minority enterprise small business investment companies (MESBICS)
acquisition
40. 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
Confidentiality
Business Summary
Subordinated Debt
Restricted Shares
41. Pre-money valuation plus the amount invested in the latest round
Adjusted Book Value
due diligence
Post-money
buyout
42. 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.
lead investor
Common Stock
Preferred Stock
Deal Structure
43. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Liquidity Event
Business Plan
exit
Conversion Rights
44. 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.
follow-on
debt financing
Elevator Pitch
Dividends
45. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
small business investment companies (SBIC)
private investment in public equities (PIPE)
Capital
NDA (Non-disclosure agreement)
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
small business investment companies (SBIC)
Capital Call 'Drawdown'
Seed Money
Series A Preferred Stock
47. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
series a preferred stock
Limited Partner
Preferred Stock
48. 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
Post-Money Valuation
benchmarks
capital gain
seed capital
49. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
recapitalization
Market Capitalization
Warrants
Qualified IPO
50. The way you buy stock
Pre-Money Valuation
PPM
Membership Interest
Bridge Financing