Entrepreneurship

many entrepreneurs go about the task of raising capital haphazardly because they ________.

• are uncomfortable talking about money and they haven't written a business plan

• lack experience in this area and because they don't know much about their choices

• are focused on the nuts and bolts of starting their business

• are intimidated by the process and they are unsure of how much money they need

The three primary reasons startups need funding are ________.

• cash flow challenges, capital investments, and lengthy product development cycles

• business research, cash flow challenges, and costs associated with building a brand

• bonuses for members of the new venture team, attorney fees, and lengthy product development cycles

• attorney fees, capital investments, and marketing research

In startup firms, inventory must be purchased, employees must be trained and paid, and advertising must be paid for before cash is generated from sales. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

• Cash flow challenges

• Marketing costs

• Personnel costs

• Lengthy product development cycles

Peter Simmons owns a specialized computer software company. Although Peter's software designers and programmers are very good, it takes 2-3 years to develop a good software product. This example illustrates the need for funding or financing referred to as ________.

• personnel costs

• marketing costs

• costs associated with building a brand

• lengthy product development cycles

the seed money that gets a company off the ground typically comes from ________.

• angel investors

• venture capitalists

• commercial banks

• the founders of the firm

the second source of funds for many new ventures is ________.

• government grants

• business angels

• friends and family

• banks

The first sale of stock by a firm to the public is referred to as a(n) ________.

• original public submission

• preemptive initial offering

• original open offering

• initial public offering

________ is a financial transaction whereby a business sells its accounts receivable to a third party at a discount in exchange for cash.

• Factoring

• Vendor credit

• Peer-to-peer lending

• Crowdfunding

What is meant by the term "bootstrapping"? Provide several examples of the ways that entrepreneurs bootstrap to raise money or cut costs?

What is the difference between equity funding and debt financing? What are the most common sources of equity funding and debt financing?