Marketplaces- Lesson 3 Startup to IPO

A(n) _________ is a person who starts a new business and assumes all the risks and rewards of running the business.

• Angel investor

• Venture capitalist

• Manager

• Entrepreneur

Which of the following statements about entrepreneurs is TRUE?

• Entrepreneurs are not willing to take risk

• Entrepreneurs use traditional, old methods when they start a new company

• Both A and B

• Neither A nor B

What are some common traits good entrepreneurs have?

• They take calculated risks.

• They try to solve problems by using new products and processes.

• Both A and B

• Neither A nor B

If an entrepreneur says they are using “bootstrap financing,” what are they referring to?

• They took a bank loan to help pay for their startup costs

• They are looking for private investors for their company.

• They used their own money to start their business

• They are looking to go public on the stock market

When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors.

• debt financing

• bootstrapping

• venture capital

• angel investing

_____ is a method of raising fresh capital by selling shares of the company to public, institutional investors, or financial institutions.

• debt financing

• equity financing

• bootstrapping

• venture capital

What is the difference between debt financing and equity financing?

• Startups are often able to get debt financing much easier than equity financing

• Equity financing involves selling shares of ownership in the company while debt financing does not

• Equity financing often involves paying interest while debt financing does not

• None of the above

Which of the following statements about debt financing is FALSE?

• Debt financing comes from banks or other commercial lenders

• When a bank gives a company a loan, they become partial owners of the company

• Companies often have to pay interest when they use debt financing

• It’s harder for startups to get debt financing

Which of the following statements about equity financing is FALSE?

• Companies often have to pay interest when they use equity financing

• Equity financing is a popular option for startups

• Equity financing is when a company sells shares of ownerships to investors in order to raise money

• Equity financing can come from angel investors, venture capitalists, or the stock market

Imagine you’ve used your own money to develop your business idea. Now you need more funding to keep growing. Which financing method would be available to you at this stage?

• Debt financing

• Angel investing

• Venture capital

• Going public