Review chapter 15 - FIN303

The initial seed money comes from….

• public investors.

•  investment banks.

  
  

•  the entrepreneur or other founders.

  
  

•  commercial banks.

  
  

Bootstrapping is the process by which....

• many entrepreneurs raise "seed" money and obtain other resources necessary to start their businesses

• the entrepreneur often fleshes out his or her ideas and makes them operational

• most businesses are started by an entrepreneur

• none of the above

  
  

Which one of the following statements is NOT true?

• The process by which many entrepreneurs raise "seed" money and obtain other resources necessary to start their businesses is often called bootstrapping

• Most businesses are started by an entrepreneur who has a vision for a new business or product and a passionate belief in the concept's viability

  
  

• The initial "seed" money usually comes from the entrepreneur or other founders

• The seed money is spent on developing an initial public offering.

Which ONE of the following statements is true?

• The venture capital industry as we know it today emerged in the late 1960s with the formation of the first venture capital limited partnerships

  
  

• Modern venture capital firms tend to specialize in a specific line of business, such as hospitality, food manufacturing, or medical devices.

• A significant number of venture capital firms focus on high-technology investments.

• All of the above are true statements.

Provisions that are part of venture capital agreements include

• Timing of exit, number of board positions after exit, and what price is acceptable

  
  

• Timing of exit, the method of exit, and what price is acceptable

• he method of exit, number of board positions after exit, and what price is acceptable

• None of the above

The three principal ways in which venture capital firms exit venture-backed companies are..

..

• selling to a strategic buyer, buying out the founder, and offering stock to the public
  

• selling to a strategic buyer, selling to a financial buyer, and buying out the founder

• selling to a strategic buyer, selling to a financial buyer, and offering stock to the public.

  
  

•  None of the above

Which one of the following statements is NOT true?

• Approximately $23 billion was invested in venture capital funds in 2010

  
  

• The venture capital industry as we know it today emerged in the late 1990s

• Modern venture capital firms tend to specialize in a specific line of business, such as hospitality, food manufacturing, or medical devices

• A significant number of venture capital firms focus on high-technology investments

Disadvantages of going public include all EXCEPT

• Managers' tendency to focus on long-term profits

• The high cost of the IPO itself

• The costs of complying with ongoing SEC disclosure requirements

• The transparency that results from this compliance can be costly for some firms

Which ONE of the following statements is true?

• After the IPO, there is a less active secondary market for the firm's shares

• Only smaller amounts of capital can be raised through an IPO than the amount that can be raised through private sources

• Publicly traded firms find it easier to attract top management talent

• Going public can enable an entrepreneur to fund a growing business but not without giving up control

Advantages of going public include all EXCEPT

• Larger amount of capital can be raised this way than the amount that can be raised through private sources

• Publicly traded firms find it harder to attract top management talent

• oing public can enable an entrepreneur to fund a growing business without giving up controlG

• Additional equity capital can usually be raised through follow-on seasoned public offerings at a low cost