Deck 12: Bootstrapping for Resources

Question 1

Crowdfunding can best be described as:

A)obtaining funds from a group of investors
B)obtaining funds from many people, who together form "the crowd"
C)raising capital from a large audience, usually through the Internet
D)a high-risk strategy to raise startup money

Answer 1

C

Question 2

Which of the following is an advantage of bootstrapping and starting slowly?

A)The business will grow faster without interference from venture capitalists.
B)You are more likely to build a larger customer base due to a slower start.
C)You will not spend personal funds.
D)You will avoid risk.

Answer 2

B

Question 3

According to the eight components (steps) of practice, what should an entrepreneur do after he or she has calculated affordable risk?

A)start with means at hand
B)reflect on your progress
C)network and enroll others
D)take small action

Answer 3

D

Question 4

Using whatever resources you have to save money while you are getting your business started is referred to as which of the following?

A)seed money
B)guerilla startup
C)penny pinching
D)skeletal startup

Question 5

Stephen offers discounts on his product, explaining that the savings are due to prelaunch discounts.This is an example of what bootstrapping strategy?

A)product testing
B)pilot studies
C)penny pinching
D)customer acquisition

Question 6

Which of the following would be considered an acceptable penny-pinching strategy?

A)hire employees but don't pay them
B)pay yourself a salary
C)attend networking events to get connections
D)give up your day job so that you can focus full time on the business

Question 7

Which of the following is an advantage of bootstrapping?

A)You can expand your business faster.
B)You will avoid the risk.
C)Angel investors and VCs are more likely to fund you if you have bootstrapped.
D)You can rely on your own judgment and advice.

Question 8

What was the source of funding for the launch of MorphCostumes?

A)angel investor
B)venture capital funds
C)the use of personal funds
D)a bank loan

Question 9

What are the "3 Fs"?

A)The three major sources of formal funding.
B)A slang term meaning angel investors.
C)Your circle of family, friends, and fools willing to help you with your initial startup.
D)Free financial funding.

Question 10

What is the advantage of funding from an angel investor?

A)You may gain advice and guidance.
B)You will not have to pay the investment.
C)You will not be expected to use your own money toward your business.
D)The funding is easy to attain.

Question 11

Which of the following would be considered an acceptable penny-pinching strategy?

A)offer company equity instead of paying employees up front
B)never offer discounts on the sale of your product or service
C)never outsource tasks
D)don't pay vendors until the business is successful

Question 12

What is the name given to the process of building a business with very little funding?

A)seed startup
B)bootstrapping
C)zero funding
D)skeleton funding

Question 13

When someone states, "I don't have money to start a business," what fact might one consider?

A)Most businesses start without any formal investment.
B)This is a valid reason for not starting a business.
C)Formal investment will be needed to make a successful company.
D)People who have no money cannot start a business.

Question 14

What should a startup focus on when thinking about funding?

A)Focus on following your balance sheet.
B)Focus on the money on hand.
C)Remember how much money you will make when the business is successful.
D)Build a strong financial forecast.

Question 15

Why is networking an important penny-pinching strategy?

A)The event frequently offers snacks so you can get a free meal.
B)Venture capitalists may be attending networking meetings.
C)You can meet people who may offer contacts that may enhance your business.
D)Angel investors may be attending networking meetings.

Question 16

Jose starts a small restaurant.On weekends, he works with his cousin to construct the tables, chairs, and counters that will go into the restaurant.What is the name given to the result of these efforts?

A)labor equity
B)owner labor
C)sweat equity
D)family ownership

Question 17

What percentage of startup businesses start without any formal investment?

A)98%
B)75%
C)50%
D)24%

Question 18

Seth starts his company with computers that he found on craigslist.com and some office furniture from the basement of his parents' home.This strategy would be considered which of the following?

A)startup
B)sweat equity
C)penny pinching
D)zero-based funding

Question 19

When asking for a loan from one of his friends, Lonnie states that the product is ready to go into stores.In fact, the product is still under development.The friend is expecting the loan to be repaid in 3 months.This would be an example of:

A)guerilla marketing
B)acceptable exaggeration
C)a potential ethical transgression
D)an accurate description of product readiness

Question 20

SuLin is setting up a small construction shop and uses his personal credit card to purchase the company's basic equipment.This process is referred to as which of the following:

A)venture capital
B)credit
C)external funding
D)bootstrapping

Question 21

Local Motors uses crowdsourcing in unique ways.Which of the following describes one of those ways?

A)to obtain customer lists
B)to obtain ideas for their new sports cars from the general public
C)to outsource the manufacturing of specific car parts
D)to market the sports car

Question 22

What product does Wikihouse produce using a form of 3D printing and wood?

A)small plastic products like dinnerware and plates
B)household products like cutting boards and cabinet fixtures
C)houses
D)miniature reproductions of famous sites

Question 23

In addition to getting the information necessary to develop their products faster, what other benefit is there for the sponsor crowdsourcing for medical treatment?

A)Aggregate (anonymous) data is used to identify potential buyers, such as medical device companies or hospitals.
B)It is an opportunity to give free medical advice.
C)Tax deductions are available to these sites.
D)Participants pay to participate because they will be the first to benefit from the treatment.

Question 24

Why is crowdfunding a growing choice for entrepreneurs?

A)Connecting with people through the Internet demonstrates tech-savviness to later investors
B)Banks and investors are growing more cautious, so crowdfunding is a more viable option.
C)All types of entrepreneurs can receive backing to start their own business.
D)Young investors tend to be more willing to invest.

Question 25

What is the typical profile of the crowdfunding backer?

A)retirees who enjoy the more direct form of investment
B)young 24- to 35-year-olds who have an income over $100,000 a year
C)40- to 60-year-olds with incomes over $250,000
D)millionaires looking to help the social good

Question 26

What was the primary benefit Local Motors gained from outsourcing manufacturing and design?

A)They rapidly increased the number of employees working for the company.
B)They raised money quickly to fund their development.
C)They saved labor costs while improving efficiency.
D)They were able to employ 3D design software.

Question 27

How much money can be raised through crowdfunding?

A)only small amounts, under $1,000
B)small amounts, generally under $5,000
C)as much money as can be raised through family and friends
D)from small amounts to amounts in the millions of dollars

Question 28

Who generally funds the site when crowdsourcing for medical information?

A)patients who want to benefit from future medical treatment
B)the potential medical provider (e.g., pharmaceutical companies)
C)third-party backers
D)no funding is required

Question 29

Alibaba.com will provide a company with what information?

A)small manufacturing sites in the United States
B)fundsourcing sites for entrepreneurs in manufacturing
C)a list of China's manufacturing sites and their capabilities
D)a list of Asian and Indian manufacturing sites and their capabilities

Question 30

What businesses can use crowdfunding?

A)mostly the arts, such as art, theater, and photography
B)mostly high-tech startups
C)mostly retail and real estate
D)all these (and more)

Question 31

What is an advantage of 3D printing in crowdsourcing?

A)It demonstrates the use of the latest in technology.
B)Companies can become factories.
C)Companies can turn designs into prototypes.
D)Small batches of product can be produced through 3D printing.

Question 32

What country did the authors suggest for manufacturing in small amounts?

A)India
B)Mexico
C)China
D)Thailand

Question 33

Local Motors uses crowdsourcing in unique ways.Which of the following describes one of those ways?

A)to obtain customer lists
B)to obtain ideas for their new sports cars from their community of hobbyists, designers, and engineers
C)to obtain ideas for their new sports cars from the general public
D)to obtain users for pilot testing

Question 34

Crowdsourcing can be used to improve medical treatment by:

A)raising money for medical research
B)finding free medical care for patients
C)sharing medical information so as to help in the development of pharmaceuticals, medical devices, and other forms of medical development
D)protecting private patient information

Question 35

Local Motors uses crowdsourcing in a unique way.How do they use it?

A)to obtain customer lists
B)to obtain ideas for their new sports cars from their community of hobbyists, designers, and engineers
C)to obtain ideas for their new sports cars from the general public
D)to obtain users for pilot testing

Question 36

Crowdsourcing refers to which of the following?

A)raising money on the Internet
B)obtaining promises of money at some time in the future
C)locating cites for crowdfunding
D)using the Internet to attain free or reduced labor from people interested in your product or cause

Question 37

What does the term digital printing mean?

A)a method of using a software-created digital image to directly form the image in a variety of media
B)any use of software to create a 3D image
C)any printing from a software design program
D)a form of printing using small dots to create the image

Question 38

Crowdfunding and crowdsourcing would be considered which of the following strategies?

A)formal fundraising
B)bootstrapping
C)angel funding
D)none of these

Question 39

In reference to crowdfunding, a backer is best described as:

A)a person who will pay back a loan if you fail to do so
B)people who contribute support in a crowdfunding venture
C)the site on which crowdfunding ventures occur
D)the financial institution that manages the transfer of money

Question 40

Who submits designs for Wikihouse?

A)engineers who sell the designs to manufacturers of houses
B)crowdfunders who submit blueprints
C)3D printing companies
D)the people who ultimately will build the final product

Question 41

How does Kickstart get its money?

A)by charging a percentage of the funds obtained from each successful project
B)by charging members a modest fee for posting their request
C)by using crowdfunding themselves
D)by listing themselves as a nonprofit and getting grants

Question 42

What is the characteristic of the patronage model of crowdfunders?

A)investors provide financial support with no expectation of direct return
B)investors are rewarded for their financial support
C)equity is exchanged for the contribution
D)funds are treated as loans

Question 43

Which of the following could not be offered in a Kickstarter campaign?

A)free product or product sample
B)participation in a cash award raffle
C)presale delivery of the product or service
D)free tickets to a play

Question 44

Which of the following crowdfunding sites would be best if raising money for a civic project?

A)Kickstarter
B)Peerbackers
C)Quirky
D)RocketHub

Question 45

What made equity crowdfunding possible?

A)the success of other crowdfunding sites
B)the JOBS Act, signed by President Obama
C)changes in Dow Jones
D)advances in the software of crowdfunding sites

Question 46

In addition to raising funds in a given period of time, what else is required in a Kickstarter project?

A)The project must be available on a global basis since contributors can come from anywhere.
B)Participants must subject themselves to a background check.
C)A specific fundraising goal must be set and met within the time period allowed.
D)They must create a video demonstrating or talking about their project.

Question 47

What is the largest global crowdfunding site?

A)Kickstarter
B)Indiegogo
C)Globalfund
D)RocketHub

Question 48

What percentage of Kickstarter projects have been successful?

A)28%
B)48%
C)68%
D)78%

Question 49

What must be offered by someone who uses Kickstart for a fundraising project?

A)They must create something to share with contributors.
B)They must offer to return the exact amount of the contributed funds within a given period of time.
C)They must offer to give a portion of their funds to a charity.
D)They must offer to return the money if the person changes his or her mind.

Question 50

What is the best form of marketing for a crowdfunding project?

A)having a risk-free reward for contributions
B)having a strong link to social media
C)having a strong link to corporate support
D)having frequent campaigns that expose contributors to the project

Question 51

Which of the following crowdfunding sites would be best if raising money for a new invention?

A)Kickstarter
B)Peerbackers
C)Quirky
D)RocketHub

Question 52

What was the surprising result of the Coolest Cooler's Kickstart product?

A)The company raised over 20 times the expected amount but failed to deliver the product to its backers first, as promised.
B)The company failed several Kickstart projects, only to raise 20 times the amount asked for in the final campaign.
C)The company raised over 20 times the needed money, leveraging the company to a huge success.
D)The company raised over 20 times the needed money, only to return the money after the project ended.

Question 53

What is the most effective reward to offer to Kickstart contributors?

A)a cash award
B)awards-in-kind that offer equivalent value for the cash contributed
C)offering the contributor to be the first to be able to purchase the product, along with a contribution award
D)offering to list the person as a founding contributor on all product and service literature

Question 54

What is the maximum time a person can spend trying to raise funds through Kickstarter?

A)20 days
B)30 days
C)60 days
D)up to a year

Question 55

What happens in Kickstarter if the funds are not raised in the given amount of time?

A)The project is automatically extended for another 30 days.
B)The project owner can keep the money raised up to the end of the period.
C)The project owner can transfer funds earned to a project of his or her choice.
D)The money is not earned and no money will be received.

Question 56

Which site is specifically for nonprofits?

A)Kickstarter
B)Peerbackers
C)Crowdrise
D)RocketHub

Question 57

What cannot be a Kickstarter project?

A)technology products
B)charities
C)food and restaurant businesses
D)retail stores

Question 58

How does equity crowdfunding differ from other types of crowdfunding?

A)Investors are given the opportunity to become company shareholders.
B)Funds are raised from a community of angel and venture capitalists.
C)Funds are provided by the government.
D)Financial institutions are allowed to raise funds on these sites.

Question 59

What happens if the funds raised on Kickstarter exceed those specified at the start of the project?

A)The excess money is contributed to a general fund.
B)The owner of the project can keep the excess funds.
C)No one is allowed to contribute once the goal has been attained.
D)The excess must be returned to the last contributors.

Question 60

Which of the following crowdfunding sites would be best if raising money for a science-related project?

A)Quirky
B)Kickstarter
C)Indiegogo
D)RocketHub

Question 61

What is the characteristic of the lending model of crowdfunders?

A)investors provide financial support with no expectation of direct return
B)investors are rewarded for their financial support
C)equity is exchanged for the contribution
D)funds are treated as loans

Question 62

Of the following, what best describes the value of crowdfunding?

A)Projects are easy to conduct.
B)There are various options to funds other than giving a part of the company away.
C)It is relatively risk free.
D)It is the easiest way to get worldwide recognition.

Question 63

What should be done by an entrepreneur who expects a successful crowdfunding campaign?

A)Offer samples of the product so that the investor can have a hands-on experience with the product.
B)Test the product with a survey or beta test prior to the campaign.
C)Set up links with suppliers, distributers, and warehouses before launching the product on a crowdfunding site.
D)Prepare for a backup fundraiser plan.

Question 64

What is the characteristic of the investor model of crowdfunders?

A)investors provide financial support with no expectation of direct return
B)investors are rewarded for their financial support
C)equity is exchanged for the contribution
D)funds are treated as loans

Question 65

Which of the following is NOT one of the basic rules of Kickstarter?

A)Projects must create something to share with others.
B)Projects must launch products within two months.
C)Projects must be honest and clearly presented.
D)Projects cannot fund-raise for charity.

Question 66

Lorraine offers to give people a percentage of the profits earned from her theater production as a reward for donating $100 to the production's equipment.Kickstarter did not approve her campaign because:

A)it was a theater production and not a product
B)she wanted to offer a financial reward
C)she was asking too much of an investment, given the reward
D)she was asking too little of an investment, given the reward

Question 67

According to the textbook, which is the most established crowdfunding site?

A)Kickstarter
B)Quirky
C)Indiegogo
D)Rockethub

Question 68

What should be done by an entrepreneur who expects a successful crowdfunding campaign?

A)Know and plan how to deliver the product to a large group of consumers.
B)Offer samples of the product so that the investor can have a hands-on experience with the product.
C)Test and refine the idea so that the product is clear and the investor knows what problem the product solves.
D)Test the product with a survey or beta test prior to the campaign.

Question 69

Why is it important to talk to others who have used crowdfunding?

A)You will get a better idea of what to do and what to avoid in your campaign.
B)You can engage them in your own campaign.
C)You can gain valuable information about their product or service.
D)It is a networking opportunity.

Question 70

Greg is using a fundraiser site and is offering 10 shares of stock to those who contribute a minimum of $100 dollars to his product.What model of crowdfunding is Greg using?

A)investor
B)patronage
C)reward
D)lending

Question 71

What should be done with the product concept in order to conduct a successful campaign?

A)Provide schematic designs or service examples so that the product is clear.
B)Offer samples of the product so that the investor can have a hands-on experience with the product.
C)Test and refine the idea so that the product is clear and the investor knows what problem the product solves.
D)Test the product with a survey or beta test prior to the campaign.

Question 72

What unique way did international singer Verity Price use to engage her audience?

A)She told an emotional story of her start as a singer.
B)She raised funds exclusively in other countries.
C)She built relationships with her customers by allowing them to vote on the songs she should include in her album.
D)She provided online scores to her album music.

Question 73

One of the problems with the Coolest Cooler was that:

A)the USB charger caused electric shocks to several customers
B)shipping was too expensive for more customers
C)supporters lost faith over delayed production
D)they crowdfunded on multiple sites, betraying community guidelines

Question 74

Which of the following is NOT a crowdfunding mistake?

A)setting a realistic funding goal
B)having no, or little, social media presence
C)failure to deliver the product or rewards after the campaign is over
D)choosing the wrong crowdfunding platform

Question 75

Gerry is working on getting the description of his product down to two sentences.He also tries out his pitch with people who have not heard of his product before.What element of conducting a campaign is Gerry observing?

A)set the right fundraising goal
B)practice the pitch
C)seek and accept advice
D)get the campaign started

Question 76

What is the characteristic of the reward model of crowdfunders?

A)investors provide financial support with no expectation of direct return
B)investors are rewarded for their financial support
C)equity is exchanged for the contribution
D)funds are treated as loans

Question 77

Kevin is about to launch a crowdfunding campaign and posts a request on his Facebook page, asking people to share their experiences on crowdfunding sites.What element of conducting a campaign is Kevin observing?

A)set the right fundraising goal
B)practice the pitch
C)seek and accept advice
D)get the campaign started

Question 78

Crowdfunding that gives backers the opportunity to become shareholders in a company is called ____________.

A)crowdsourcing
B)shared entrepreneurship
C)professional fund management
D)equity crowdfunding

Question 79

The site Crowdcube is unique for which of the following reasons?

A)It is headquartered in Great Britain.
B)It offers a professional fund manager to monitor the money invested by international investors.
C)It invests only in Israeli startups.
D)It was the first international equity crowdfunding site.

Question 80

What should entrepreneurs do in communicating about their product during a crowdfunding campaign?

A)Communicate the message of your product in no more than two sentences.
B)Cescribe the details of your product so that it is distinct from similar products.
C)Provide images and pictures of the product or service.
D)Provide flexibility in the final form of your product.