Exam 12: A Firms Sources of Financing

Around 5 percent of the business plans reviewed by venture capitalists are funded.

To determine how well her business is doing, Darlene should monitor the return on her investment (equity) because it is a better measure of performance than the

Describe the two categories of private equity investors who offer financing to small businesses.

One potential problem with acquiring funds from friends and relatives is that they might feel they have the right to interfere in the management of the business.

Most startup investors limit their investing to firms that offer potentially high returns within a one- to three-year period.

Although not the primary source of financing for most small business startups, another source of early financing can be

Andrew is a venture capitalist who would like to find a good new business in which to invest. He's done this before so he has learned to limit his investing to firms with potentially high returns in a _____ period.

Ben left the corporate rat race to start his own business that will allow him to earn a small income while providing plenty of time to pursue his love of pottery making. He does not expect either growth or high profits. Ben's prospects for attracting outside financing are

Which of the following investors are generally more "friendly" but also can be very demanding?

Instead of borrowing money from suppliers to purchase equipment, an increasing number of small businesses are

Match the definition with its term. -An SBA program that helps to finance companies that plan to transform laboratory research into marketable products

Sandy is using a government program to help finance her new business. Her company is not eligible for a loan through a normal lending channel and is receiving $120,000 with the SBA guaranteeing 85 percent of the loan. She also had to submit a loan application to the lender. Sandy is participating in the

Small business investment companies (SBICs)

In the beginning, some entrepreneurs use _____ as a source of financing.

Match the definition with its term. -A loan program that helps small companies obtain financing through a guaranty provided by the SBA

Venture capitalists restrict their investment in startup companies.

Private placement

Phil is approaching a banker for some additional financing. Which of the following assets would be most important to the banker?

Isaac is looking for a business angel. The traditional way of finding one is through

Williams Alternative Power, Inc., a company developing solar panels, has done considerable research and limited production during its two-year life. It is about ready for its IPO. At this stage of its life cycle, its ability to attract venture capital is