Question 1

Imagine that you have a new,tested invention that will require a million dollars in order to produce enough of the product to return a profit.What considerations should you review before approaching a venture capitalist?

Accepted Answer

Ideally,the entrepreneur should have som...

Question 2

What will be the first opportunity for the investor to sell stocks on the stock market?

Accepted Answer

A)  at any time after the initial investment
B)  when the company is profitable,usually after 5 years
C)  with the company's initial public offering (IPO) 
D)  whenever there is a buyer

Question 3

Minority business angels account for what percentage of the total angel investor population in the United States?

Accepted Answer

A)  13%
B)  0%
C)  20%
D)  25%

Question 4

Typically,entrepreneurs value their companies based on its current financial performance.

Accepted Answer

A) True 
 B)False

Question 5

When valuing a seed-stage,startup,or early-stage company,which of the following is most likely to be considered?

Accepted Answer

A)  the company's history of sales
B)  how much time it will take for the business to become profitable
C)  the length of time invested in developing the product or service
D)  the amount of capital already raised by the founders

Question 6

______ angels are successful entrepreneurs who want active involvement in the companies they invest in.

Accepted Answer

A)  Entrepreneur
B)  Professional
C)  Enthusiast
D)  Micromanagement

Question 7

Describe what you should look for during your assessment of a venture capitalist.

Accepted Answer

In addition to considering the financial...

Question 8

What is the ultimate reason for trading equity for financial support?

Accepted Answer

A)  It is more likely that the entrepreneur will build a more valuable company.
B)  It is usually a deal/no deal option.
C)  There will be more people interested in the company's success.
D)  Preparing for the questions asked in pitching and due diligence will ultimately improve the company.

Question 9

Very few founding CEOs are pushed out after giving up equity to VCs.

Accepted Answer

A) True 
 B)False

Question 10

______ consist(s) of small amounts of capital given to help prove a concept.

Accepted Answer

A)  Direct cross-subsidies
B)  Seed-stage financing
C)  Startup financing
D)  Early-stage financing

Question 11

How is a seed-stage company valued?

Accepted Answer

A)  on the anticipation of future growth
B)  on the value that it has on hand
C)  by the number of shareholders
D)  on the basis of its financial history

Question 12

An investor has offered $150,000 for 20% of the company.The company has a pre-money valuation of $350,000.Should the entrepreneur consider the offer?

Accepted Answer

A)  No; the investor is asking too great a percentage.
B)  Yes; the investor is asking for less than the value of the investment.
C)  No; the investor is not offering enough for the value of the company.
D)  It cannot be determined.

Question 13

Even though your business may not currently be profitable,investors will want to know how many customers you have,primarily because it will show the potential ______.

Accepted Answer

A)  for customer satisfaction
B)  to scale the business
C)  marketability
D)  revenue from that base

Question 14

In early-stage financing,small amounts are given so that entrepreneurs can prove a business concept.

Accepted Answer

A) True 
 B)False

Question 15

Venture capitalists look for ventures that will earn them ______ times their original investment.

Accepted Answer

A)  two to five
B)  five to ten
C)  seven to 12
D)  10 to 15

Question 16

Entrepreneurs can seek advice from lawyers and accountants to help determine the market rates for companies like theirs.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following spawned the growth of a whole new generation of venture capitalist companies?

Accepted Answer

A)  general business growth
B)  the improving economy of second- and third-world countries
C)  the rise of smartphones and tablets
D)  the 10-year cycle of venture capitalists

Question 18

______ angels sometimes seek to be paid advisers.They generally come from a profession such as lawyers or accountants.

Accepted Answer

A)  Corporate
B)  Entrepreneur
C)  Professional
D)  Enthusiast

Question 19

Entrepreneurs should not conduct due diligence on potential venture capital investors.

Accepted Answer

A) True 
 B)False

Question 20

______ angels are usually former business executives seeking profit who often are also looking to play a large part in the company.

Accepted Answer

A)  Corporate
B)  Entrepreneur
C)  Professional
D)  Enthusiast

Exam 13: Financing for Startups

Minority business angels account for what percentage of the total angel investor population in the United States?

Correct AnswerverifiedShow Answer

Even though your business may not currently be profitable,investors will want to know how many customers you have,primarily because it will show the potential ______.

Correct AnswerverifiedShow Answer

What is the ultimate reason for trading equity for financial support?

Correct AnswerverifiedShow Answer

When valuing a seed-stage,startup,or early-stage company,which of the following is most likely to be considered?

Correct AnswerverifiedShow Answer

______ consist(s) of small amounts of capital given to help prove a concept.

Correct AnswerverifiedShow Answer

Which of the following spawned the growth of a whole new generation of venture capitalist companies?

Correct AnswerverifiedShow Answer

How is a seed-stage company valued?

Correct AnswerverifiedShow Answer

Entrepreneurs should not conduct due diligence on potential venture capital investors.

Correct AnswerverifiedShow Answer

______ angels sometimes seek to be paid advisers.They generally come from a profession such as lawyers or accountants.

Correct AnswerverifiedShow Answer

Venture capitalists look for ventures that will earn them ______ times their original investment.

Correct AnswerverifiedShow Answer

What will be the first opportunity for the investor to sell stocks on the stock market?

Correct AnswerverifiedShow Answer

Describe what you should look for during your assessment of a venture capitalist.

Correct AnswerverifiedIn addition to considering the financial...View AnswerShow Answer

Typically,entrepreneurs value their companies based on its current financial performance.

Correct AnswerverifiedShow Answer

Imagine that you have a new,tested invention that will require a million dollars in order to produce enough of the product to return a profit.What considerations should you review before approaching a venture capitalist?

Correct AnswerverifiedIdeally,the entrepreneur should have som...View AnswerShow Answer

An investor has offered $150,000 for 20% of the company.The company has a pre-money valuation of $350,000.Should the entrepreneur consider the offer?

Correct AnswerverifiedShow Answer

Very few founding CEOs are pushed out after giving up equity to VCs.

Correct AnswerverifiedShow Answer

In early-stage financing,small amounts are given so that entrepreneurs can prove a business concept.

Correct AnswerverifiedShow Answer

Entrepreneurs can seek advice from lawyers and accountants to help determine the market rates for companies like theirs.

Correct AnswerverifiedShow Answer

______ angels are successful entrepreneurs who want active involvement in the companies they invest in.

Correct AnswerverifiedShow Answer

______ angels are usually former business executives seeking profit who often are also looking to play a large part in the company.

Correct AnswerverifiedShow Answer

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In addition to considering the financial...
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Ideally,the entrepreneur should have som...
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