Venture Capital, Finance And Accounting

Question: Which of the following would be considered an exit strategy?
A
Making a private company public via an initial public offering

B
Bringing in additional investors

C
Firing the management to bring in a more experienced management

D
Converting debt to shares

Note: Not available
1. Report
Question: What is the primary source of a venture capital firm's funding?
A
The venture capital firm invests its own equity in other companies.

B
The partners of the venture capital firm invest individually.

C
The money is raised through the stock market for the purpose of investing it in companies.

D
Other companies invest in the venture capital firm which then invests in new ventures.

Note: Not available
1. Report
Question: What is the overall venture capital portfolio expectation?
A
That ten out of ten companies will be huge successes

B
That all the ten will perform satisfactorily

C
That five of the ten will succeed, five will fail

D
That out of every ten companies invested in, at least one will be a tremendous success, at least five will fail completely, and the other four will break even or be marginally successful

Note: Not available
1. Report
Question: When is the due diligence process done?
A
After the initial engagement, but before the completion of the deal

B
Before getting engaged with the potential target investment

C
As a final step before the deal is completed

D
The target investment company would do this before approaching the venture capitalist

Note: Not available
1. Report
Question: What is the main difference between equity and debt?
A
Equity represents ownership, debt represents a loan to the company.

B
Debt represents steady earnings, equity represents up and down earnings.

C
Debt can be secured by assets but equity can not be.

D
Debt is easier to sell than equity.

Note: Not available
1. Report
Question: What does a venture capitalist look like to its investors, based on the way it operates?
A
A stock broker

B
A mutual fund

C
An investment bank

D
An options trader

Note: Not available
1. Report
Question: What role does "valuation" play in selecting the most appropriate investment areas?
A
Valuation gives the venture capitalist a definite value of the target in five years.

B
Valuation doesn't matter as much as the management team.

C
Valuation is the target company's expected value at some point in the future, typically five years, and helps the venture capitalist see the potential.

D
Valuation helps the venture capitalist decide which portfolio to place the target company in.

Note: Not available
1. Report
Question: What is the typical process overview?
A
Submission of Business Plan, Term Sheet, Due Diligence, Legal Closing

B
Term Sheet, Submission of Business Plan, Legal Closing

C
Evaluation, Due Diligence, Legal Closing, Business Plan Review

D
Screening, Kick off Meeting, Evaluation, Initial Due Diligence, Negotiation of Terms, Due Diligence, Legal Closing

Note: Not available
1. Report
Question: What is meant by the "anti-dilution rights", often found on a term sheet?
A
Terms that guarantee a specific return on investment

B
Terms that restrict the target company to no more than three founders owning stock

C
Terms that protect the venture capitalist from dilution of their investment by the target company by offering subsequent investments at lower valuations to other investors

D
Terms that prevent original owners from having more stock than the venture capitalist

Note: Not available
1. Report
Question: What is the first step in the process between the target company and the venture capitalist?
A
The venture capital firm will look online for companies who are looking for capital.

B
The venture capital firm holds monthly open casting calls for potential companies.

C
The target company contacts the venture capitalist to introduce the opportunity.

D
The target company mails the venture capital firm a full business plan and due diligence package.

Note: Not available
1. Report

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Question: Which of the following would be considered an exit strategy?

Question: What is the primary source of a venture capital firm's funding?

Question: What is the overall venture capital portfolio expectation?

Question: When is the due diligence process done?

Question: What is the main difference between equity and debt?

Question: What does a venture capitalist look like to its investors, based on the way it operates?

Question: What role does "valuation" play in selecting the most appropriate investment areas?

Question: What is the typical process overview?

Question: What is meant by the "anti-dilution rights", often found on a term sheet?

Question: What is the first step in the process between the target company and the venture capitalist?