Deck 13: Sources of Finance for Entrepreneurial Ventures

Question 1

What are some sources of funding for entrepreneurial start-up companies?

A)Owners,family and friends
B)Banks and government programs,and private equity placements
C)Angel investors,venture capitalists and IPOs
D)All of these choices

Answer 1

D

Question 2

Angel capital can be described as:

A)Investment in a business by a corporation to provide capital
B)Investment by a bootstrapper to provide capital
C)Investment in a business by an affluent individual to provide equity capital
D)Investment by a government funding body to provide equity capital

Answer 2

C

Question 3

What are dividends?

A)Cash,shares or other assets from an incorporated company profits,with equal distribution to the shareholders
B)Cash,shares or other assets from a partnership or sole trader with unequal distribution to the shareholders
C)Cash,shares or other assets retained and put back into the business
D)Cash,shares or other assets from a trust

Answer 3

A

Question 4

Venture capitalists provide:

A)capital for start-ups and expansion
B)management consulting functions and management audit and evaluation
C)contacts with prospective customers,suppliers and other important businesspeople
D)All of these choices

Question 5

Which of the following statements is true?

A)When starting up a venture,venture capital is not on most company's radars
B)When starting up a venture,bootstrapping is not on most company's radars
C)When starting up a venture,funding by family and friends is not an option explored by most companies
D)When starting up a venture,most companies rely on venture capital

Question 6

What is due diligence?

A)A process undertaken by potential investors to analyse and assess the desirability,value and potential of an investment opportunity
B)A process undertaken by management to ensure that employees are providing high-quality customer service
C)A process undertaken by management to check on the business
D)A process undertaken by the bank before a business is sold

Question 7

An opportunity cost can be described as:

A)the cost of using a resource versus using a different kind of resource
B)the sales you get from taking the risk and exploding the opportunity
C)the cost of using a resource in terms of the loss of its alternative uses; this is measured by the value of the next best alternative use of that resource
D)All of these choices

Question 8

A 'business angel' is:

A)A private investor who contributes money and experience to early-stage investments
B)A government investor who contributes money and experience to early stage investments
C)A family investor who contributes money and experience to late-stage investments
D)A government investor who contributes experience to established businesses

Question 9

What is the sequence of funding stages,starting from the beginning of a venture to expansion financing?

A)Bootstrapping,family financing,bank start-up,early stage financing and expansion financing
B)Bootstrapping,family financing,start-up,middle bank financing and expansion financing
C)Family bootstrapping,bank financing,start-up,early stage financing and expansion financing
D)Bootstrapping,seed financing,start-up,early stage financing and expansion financing

Question 10

What are the attributes or factors in venture capitalists' evaluation processes?

A)Timing of entry,key success factor stability,and educational capability
B)Lead time,competitive rivalry and scope
C)Entry wedge mimicry and industry-related competence
D)All of these choices

Question 11

Which of the following does the text describe as due diligence 'deal killers'?

A)An arrogant management team
B)Excessive founder salaries
C)Ignorance of the competitive landscape
D)All of these choices

Question 12

How many stages does an evaluation process typically have?

A)Six
B)Four
C)Eight
D)None of these choices

Question 13

Which of the following statements is true?

A)Money for new ventures usually comes from the four Fs - founders,family,friends and other 'foolhardy investors'
B)Money for new ventures usually comes from the four Fs - found on the ground,financed houses,foreign investment and failed stocks
C)Money for new ventures usually comes from the four Fs - founders,framers,forestry and fire sales
D)Money for new ventures usually comes from the angel investors

Question 14

Which of the following are advantages for equity financing?

A)Capital is usually only available in very large amounts and needs repayment
B)It provides large injections of cash or capital,there are no interest payments,and no obligation to repay capital
C)The amount can easily be varied according to your bank if it is repaid
D)All of these choices

Question 15

Venture capitalists are most concerned with:

A)return on investment
B)return on sales
C)ensuring secrecy
D)ensuring accounts receivable

Question 16

What is a build-out allowance?

A)An amount given to the tenant by the venture capitalist to buy the fixtures of a building
B)An amount given to the tenant by the landlord to build out the premises in a lease contract
C)An amount given to the owner by the bank to build out the premises in a lease contract
D)An amount given to the owner from an external funding organisation

Question 17

Venture capitalists can be described as:

A)Persons who syndicate the money of others to invest in a company start-up assumed as having high potential to create extraordinary returns on investments for syndicated investors
B)Persons who syndicate the money of others to invest in a company start-up assumed as having limited potential to create extraordinary returns on investments for syndicated investors
C)Persons who syndicate the money of others to invest in a company start-up assumed as having no potential to create extraordinary returns on investments for syndicated investors
D)All of these choices

Question 18

Long-term debt can be described as:

A)debt that is not payable within one year; usually loans maturing in a three- to five-year range that are used to finance the purchase of property or equipment
B)debt that is payable within one year; usually loans maturing at the end of two months
C)debt that is not required to be paid back,as it is a source of finance from the family
D)a source of debt from a shareholder who does not need paying back

Question 19

What is equity financing?

A)The sale of some ownership in the venture to gain capital for start-up
B)The sale of ownership from other ventures to gain capital for private projects
C)The sale of extra products and services for the venture to gain capital start-up
D)All of these choices

Question 20

Which of the following are examples of equity financing?

A)Loans with warrants and convertible debentures
B)Preferred shares
C)Common shares
D)All of these choices

Question 21

Crowdfunding can be defined as:

A)a way of funding by selling everything you have to a crowd
B)the practice of the tenant asking the landlord for assistance
C)the practice of funding a venture by asking a crowd gathered on the street for assistance
D)the practice of funding a project or venture by raising monetary contributions from a large number of people,typically via the Internet