Question 1

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 2

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

Accepted Answer

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

Question 3

In spite of media hype, what is the likely rate of failure for companies backed by venture capitalists?

Accepted Answer

A)  1 out of 10
B)  50%
C)  1 out of 4
D)  3 out of 4

Question 4

Describe what might occur during the market analysis component of due diligence, prior to the actual investment.

Accepted Answer

Consideration should be given to establi...

Question 5

______ 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 6

What qualifies someone as an accredited investor?

Accepted Answer

A)  only a willingness to invest
B)  net worth of the equivalent being invested
C)  net worth over $1 million or income over $200,000
D)  net worth over $200,000

Question 7

Seed-stage financing consists of small amounts of capital to help entrepreneurs prove a concept.

Accepted Answer

A) True 
 B)False

Question 8

______ consists of small amounts of capital given to help prove a concept.

Accepted Answer

A)  Startup loans
B)  Seed-stage financing
C)  Startup financing
D)  Early-stage financing

Question 9

Who is involved in the due diligence process?

Accepted Answer

A)  angel investors
B)  venture capitalists
C)  angel investors and venture capitalists
D)  banks

Question 10

Which of the following is an online source for angel investors?

Accepted Answer

A)  AngelList
B)  LinkedIn
C)  SBA.gov
D)  Investorslist

Question 11

An investor is 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 12

______ 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)  Business load
D)  Equity loan

Question 13

What feature of registering a company allows you to set aside a portion of your stock for future employees?

Accepted Answer

A)  reserve funds
B)  option pools
C)  stock reserves
D)  employee stock option plans

Question 14

Which of the following is an important distinction between angels and VCs?

Accepted Answer

A)  VC decisions are made with committees
B)  VCs are responsible for their own decisions
C)  VCs provide investments to seed companies
D)  VCs invest personal funds

Question 15

If an entrepreneur issues convertible debt, he or she will lose control of the company.

Accepted Answer

A) True 
 B)False

Question 16

Venture capitalists often reject plans and proposals for which of the following reason(s) ?

Accepted Answer

A)  the business is not a good fit with the fund's criteria
B)  the VC only invests in companies with a referral
C)  the VC does not operate in your geographical area
D)  all of these

Question 17

Which of the following would be useful when valuing your company?

Accepted Answer

A)  advice from family and friends
B)  success of a similar company in another part of the country
C)  advice from an accountant who has clients in a similar market and industry
D)  industry experts from another part of the country

Question 18

Consider that you have just been offered a million dollars to grow your business.However, the venture capitalist group will be stepping in as the management team, and you will retain 16% of the company.What should you consider in making your decision?

Accepted Answer

Most entrepreneurs give up a portion of ...

Question 19

A company's pre-money valuation is $500,000 and the post-money valuation is $600,000.How much did the angel invest?

Accepted Answer

A)  $5,000
B)  $50,000
C)  $100,000
D)  it cannot be determined

Question 20

This exit strategy allows the entrepreneur an opportunity to buy back venture capital stock at cost and an additional premium.

Accepted Answer

A)  IPO
B)  exit clause
C)  buyback
D)  retract clause

Exam 13: Financing for Startups

If an entrepreneur issues convertible debt, he or she will lose control of the company.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Venture capitalists often reject plans and proposals for which of the following reason(s) ?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Describe what might occur during the market analysis component of due diligence, prior to the actual investment.

Correct AnswerverifiedConsideration should be given to establi...View AnswerShow Answer

In spite of media hype, what is the likely rate of failure for companies backed by venture capitalists?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would be useful when valuing your company?

Correct AnswerverifiedShow Answer

What feature of registering a company allows you to set aside a portion of your stock for future employees?

Correct AnswerverifiedShow Answer

Which of the following is an important distinction between angels and VCs?

Correct AnswerverifiedShow Answer

What qualifies someone as an accredited investor?

Correct AnswerverifiedShow Answer

Seed-stage financing consists of small amounts of capital to help entrepreneurs prove a concept.

Correct AnswerverifiedShow Answer

An investor is 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

Who is involved in the due diligence process?

Correct AnswerverifiedShow Answer

______ consists of small amounts of capital given to help prove a concept.

Correct AnswerverifiedShow Answer

Which of the following is an online source for angel investors?

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

A company's pre-money valuation is $500,000 and the post-money valuation is $600,000.How much did the angel invest?

Correct AnswerverifiedShow Answer

Consider that you have just been offered a million dollars to grow your business.However, the venture capitalist group will be stepping in as the management team, and you will retain 16% of the company.What should you consider in making your decision?

Correct AnswerverifiedMost entrepreneurs give up a portion of ...View AnswerShow Answer

This exit strategy allows the entrepreneur an opportunity to buy back venture capital stock at cost and an additional premium.

Correct AnswerverifiedShow Answer

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Consideration should be given to establi...
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Most entrepreneurs give up a portion of ...
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