Question 1

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 2

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 3

Convertible debt can turn into ______ when money is received from a venture capitalist.

Accepted Answer

A)  equity
B)  conventional debt
C)  a convertible note
D)  venture capital funds

Question 4

One of the main advantages of convertible debt is that it is attractive to investors because ______.

Accepted Answer

A)  their risk of loss is minimized
B)  they will be repaid for the loan when the company is successful
C)  they may be entitled to discounts on the share price
D)  they will be the first to own stock in your company

Question 5

The authors recommend finding investors early in the game so that you can focus on building the company.

Accepted Answer

A) True 
 B)False

Question 6

An entrepreneur is asking for $1 million for 30% of his company.What is the entrepreneur's post-money valuation?

Accepted Answer

A)  $3.33 million
B)  $300,000
C)  $2 million
D)  it cannot be determined

Question 7

There is a reliable formula to determine how much equity you should keep and how much you should give away.

Accepted Answer

A) True 
 B)False

Question 8

When working with a venture capitalist,it is possible to be demoted within your own company.

Accepted Answer

A) True 
 B)False

Question 9

______ angels are individuals who have already started and successfully operated their own businesses.

Accepted Answer

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

Question 10

Research suggests that women are better investors than men,as they take more time researching potential entrepreneurial ventures,and take on less risk.

Accepted Answer

A) True 
 B)False

Question 11

If an entrepreneur receives $275,000 from venture capitalists in exchange for stock,what do the investors receive in return?

Accepted Answer

A)  royalties from future sales
B)  equity in the business
C)  access to the first round of product
D)  guaranteed board appointments

Question 12

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 13

Karen has formulated a line of green cleaning products,which she has tested with local commercial entities with great results.She is now ready to seek money to place the product in stores.What stage of financing is Karen interested in?

Accepted Answer

A)  seed-stage financing
B)  startup financing
C)  early-stage financing
D)  continuity financing

Question 14

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 15

______ consist(s) of larger amounts of funds provided for companies that have a team in place and a product or service tested or piloted,but as yet show little or no revenue.

Accepted Answer

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

Question 16

The cofounders' experience and previous successes will influence an investor's willingness to invest in a company.

Accepted Answer

A) True 
 B)False

Question 17

______ is a short-term loan that can be turned into equity when future financing is issued.

Accepted Answer

A)  Convertible debt
B)  Angel funding
C)  A business loan
D)  An equity loan

Question 18

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 19

A study of 212 U.S.startups form the late 1990s and early 2000s showed that what percentage of the founders were no longer CEO after three years?

Accepted Answer

A)  50%
B)  80%
C)  20%
D)  12%

Question 20

What type of investment vehicle do venture capital money managers typically use?

Accepted Answer

A)  bank loan
B)  limited partnership fund
C)  angel account
D)  investment bonds

Exam 13: Financing for Startups

______ angels are individuals who have already started and successfully operated their own businesses.

Correct AnswerverifiedShow Answer

A study of 212 U.S.startups form the late 1990s and early 2000s showed that what percentage of the founders were no longer CEO after three years?

Correct AnswerverifiedShow Answer

One of the main advantages of convertible debt is that it is attractive to investors because ______.

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 entrepreneur is asking for $1 million for 30% of his company.What is the entrepreneur's post-money valuation?

Correct AnswerverifiedShow Answer

Karen has formulated a line of green cleaning products,which she has tested with local commercial entities with great results.She is now ready to seek money to place the product in stores.What stage of financing is Karen interested in?

Correct AnswerverifiedShow Answer

How is a seed-stage company valued?

Correct AnswerverifiedShow Answer

What type of investment vehicle do venture capital money managers typically use?

Correct AnswerverifiedShow Answer

There is a reliable formula to determine how much equity you should keep and how much you should give away.

Correct AnswerverifiedShow Answer

The authors recommend finding investors early in the game so that you can focus on building the company.

Correct AnswerverifiedShow Answer

______ is a short-term loan that can be turned into equity when future financing is issued.

Correct AnswerverifiedShow Answer

When working with a venture capitalist,it is possible to be demoted within your own company.

Correct AnswerverifiedShow Answer

If an entrepreneur receives $275,000 from venture capitalists in exchange for stock,what do the investors receive in return?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Convertible debt can turn into ______ when money is received from a venture capitalist.

Correct AnswerverifiedShow Answer

Research suggests that women are better investors than men,as they take more time researching potential entrepreneurial ventures,and take on less risk.

Correct AnswerverifiedShow Answer

The cofounders' experience and previous successes will influence an investor's willingness to invest in a company.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

______ consist(s) of larger amounts of funds provided for companies that have a team in place and a product or service tested or piloted,but as yet show little or no revenue.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Ideally,the entrepreneur should have som...
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