Quiz 1 – Foundations of Venture Capital | Guru Startups VC Course 2025

1. Venture capital funds primarily invest in:

Public firmsEarly-stage startupsBondsReal estate

2. Limited Partners in a VC fund are typically:

Fund investorsFoundersBank lendersAccelerators

3. Carried interest refers to:

Annual management feeProfit share to General PartnersFounder bonusLegal expenses

4. General Partners are responsible for:

Auditing LPsManaging and investing the fundCreating regulationProviding debt financing

5. The typical lifetime of a VC fund is:

2–3 years5 years8–12 years20 years

6. Management fees are usually charged as:

1 %2 %5 %10 %

7. Carried interest is generally:

10 %15 %20 %30 %

8. Which entity provides capital to VC funds?

Limited PartnersFoundersAngel investorsCrowdfunding platforms

9. Which document summarizes investment terms before legal contracts?

Shareholders’ AgreementTerm SheetMemorandum of UnderstandingIPO Prospectus

10. A cap table shows:

Product roadmapEquity ownership structureFinancial ratiosCash flow statements

11. Pre-money valuation means:

Valuation before new investmentValuation after investmentPost-tax valuationLiquidation value

12. Post-money valuation equals:

Pre-money + new capitalPre-money − feesRevenue × multipleAssets − liabilities

13. A convertible note is:

Loan convertible into equityCash grantRevenue share contractIPO document

14. Dilution occurs when:

A company repurchases sharesNew shares are issued to investorsFounders increase ownershipEmployees resign

15. A power-law distribution in VC returns means:

Most investments fail but few yield outsized returnsAll investments have equal returnsReturns follow normal distributionNo losses occur

16. Seed stage investments usually target:

Mature public companiesEarly concepts and prototype startupsGovernment projectsLarge cap enterprises

17. Series A funding focuses on:

Idea validationScaling business model and teamIPO preparationDebt repayment

18. Due diligence verifies:

Only legal statusFinancial, legal and market factorsProduct design onlyBrand colors

19. A liquidation preference gives:

Investors priority payout on exitFounders higher salaryGovernment tax benefitsEmployees extra bonus

20. Anti-dilution clauses protect:

Founders from ownership lossInvestors from down-round valuation dropsEmployees from ESOP taxCustomers from price changes

21. A term sheet is usually:

Legally bindingNon-binding summary of termsTax documentMarketing brochure

22. Vesting ensures:

Immediate payoutLong-term commitment of employees and foundersBonus every monthShort-term profits

23. Information rights allow investors to:

Change the CEOAccess company financial reportsControl day-to-day decisionsIssue new shares

24. Governance in VC funds means:

Adherence to fiduciary duties and reportingMarketing campaignsRecruitment onlyOffice management

25. The primary goal of VC investing is:

Short-term dividendsLong-term capital appreciationTax savings onlyDebt collection

26. An exit in VC context refers to:

A founder resigningInvestors realizing returns via IPO or M&ACompany shutdownLoan closure

27. IRR stands for:

Internal Rate of ReturnInvestment Risk RatioInterest Rate on RevenueInitial Return Rate

28. DPI measures:

Distributed cash to paid-in capitalDebt per investmentDiscount per issueDaily price index

29. TVPI stands for:

Total Value to Paid-InTime Value per InvestmentTax Value Profit IndexTotal Volume Price Indicator

30. Deal sourcing often relies on:

Accelerators and referralsRandom selectionPublic tendersStock exchanges

31. Founder coachability is:

Irrelevant to VCsA key evaluation criterionPurely technicalOnly HR-related

32. Market size in VC screening is evaluated by:

TAM / SAM / SOM frameworksGDP onlyNumber of employeesWebsite traffic

33. A portfolio company is:

Any startup invested in by a VC fundCompetitor companyGovernment entityBank

34. Follow-on investments mean:

New investors joinExisting VCs invest again in later roundsFounders repurchase sharesIPO listing

35. LP reports are typically shared:

Annually or quarterlyMonthlyDailyNever

36. Accelerators offer:

Mentorship and small equity fundingDebt instrumentsMarketing services onlyRegulatory licenses

37. Incubators usually focus on:

Ideation and early development supportIPO filingsLate-stage growthDebt collection

38. A lead investor typically:

Sets the valuation and term sheet termsHandles accountingProvides marketing supportFiles tax returns

39. Pro-rata rights allow an investor to:

Invest in future rounds to maintain ownershipExit immediatelyReduce valuationTransfer shares to founders

40. Drag-along rights enable:

Majority shareholders to force a saleFounders to avoid salesGovernment to interveneInvestors to cancel deals

41. Tag-along rights protect:

Minority shareholders to sell along majorityCreditorsVendorsAuditors

42. A bridge round is:

Interim financing between major roundsDebt loan from banksIPO preparationAcquisition financing

43. Convertible SAFE stands for:

Simple Agreement for Future EquitySecured Asset Finance EntityShareholder Agreement Fund EntryStructured Asset Fund Equity

44. A fund’s vintage year refers to:

Year of initial capital commitmentFund closure yearIPO yearTax filing year

45. A GP commit means:

GPs invest their own capital in the fundLPs guarantee returnsFounders repay GPsBanks fund GPs

46. The primary difference between angel and VC investors is:

Angels invest personal capital; VCs manage others’ fundsBoth are identicalVCs invest smaller amountsAngels require control rights

47. The first step in deal screening is:

Evaluating team and market fitLegal documentationTerm-sheet negotiationIPO planning

48. A startup’s ‘runway’ refers to:

Time until cash runs out given current burn rateAirport operationsRevenue pipelineExit plan

49. The role of a VC associate primarily includes:

Deal sourcing and financial analysisManaging IT systemsAuditing LPsDesigning marketing ads

50. Startup traction is usually measured by:

Revenue growth, users, and engagementOffice sizePress mentionsFounder age

51. The key stakeholders in a VC ecosystem are:

Entrepreneurs, Investors, Accelerators, GovernmentsOnly EntrepreneursRegulators onlyBanks only

52. In VC funds, the term ‘dry powder’ refers to:

Uninvested capital reserved for future dealsDebt obligationsTax savingsIPO proceeds

53. The primary purpose of a term sheet negotiation is to:

Align founder and investor expectations before legal draftsAvoid valuation discussionBypass lawyersSecure bank loans

54. A successful VC portfolio usually relies on:

A few high-performing startups offsetting many lossesEqual returns from all investmentsShort-term exits onlyDebt funding focus

Try Our Pitch Deck Analysis Using AI