ENTR 302: Chapter13

What is equity financing?

• value of the total company assets

• value a company earns and borrows against

• debt incurred by a company

• sale of shares of stock in exchange for cash

What is a general rule of thumb for new startups in relation to financing?

• Avoid seeking investment for as long as possible.

• Try to get as much funding as possible as soon as possible.

• Immediately line up one committed investor with deep pockets.

• Seek many small investments from a wide range of people right away.

What is the easiest way for startups to determine their company’s potential?

• See how similar companies are being valued.

• Determine the economic health of the market area.

• Look at the track record of the cofounding team.

• Analyze the company’s financial forecast.

Even though your business may not currently be profitable, investors will want to know how many customers you have, primarily because it will show the potential ______.

What qualifies someone as an accredited investor?

• a willingness to invest more than their net worth

• net worth of the equivalent being invested

• net worth over $1 million or income over $200,000

• net worth over $500,000

How much return does a typical angel investor expect from their investment?

• zero, as the investment is considered a gift

• double the amount invested within 2 years

• 10 times the investment in 5 years

• 3 times the investment within 3 years

What type of investment vehicle do venture capital money managers typically use?

• bank loan

• limited partnership fund

• angel account

• investment bonds

Which of the following spawned the growth of a whole new generation of venture capitalist companies?

• general business growth

• economic improvement across the globe

• the rise of smartphones and tablets

• the 10-year cycle of venture capitalists

The term ______ refers to a rigorous process that evaluates an investment opportunity prior to a deal being finalized.

What will be the first opportunity for the investor to sell shares on the stock market?

• at any time after the initial investment

• when the company is profitable, usually after 5 years

• with the company’s initial public offering (IPO)

• whenever there is a buyer