Exam 11: Raising Money for Starting and Growing Businesses

The liquidation value of a company is a strict valuation placed on an insolvent company by the courts during a bankruptcy proceeding.

All of the following are mentioned in the chapter as possible sources of funding that the entrepreneur should explore prior to soliciting investments from family and friends, except:

A rapidly growing, high-potential firm will generate a lot of free cash flow in its first few years.

In recent years, approximately how many venture-backed companies went public?

Venture capitalists will invest only if the company has the potential to return at least:

Which factor is often more favorable in an acquisition, as compared to an IPO?

Angel investors are one category of formal investors.

Buybacks of investors' equity is a common exit strategy for venture capital firms.

The least desirable way for venture capitalist to harvest an investment is:

For the entrepreneur advancing through the IPO process, what is the step that immediately follows the SEC's approval of the preliminary prospectus?

Acquisitions are legally barred, by the SEC, from being paid in cash.

After the IPO, the company has to file a registration statement with the SEC.

IPOs are rare, even among venture capital backed companies.

The period when the prior shareholders are not permitted to sell any of their stock is called:

Which of the following about a potential venture capitalist should be cause for concern?

Selling the company is the most common way of harvesting an investment.

What are the most attractive companies that go public usually backed with?

Professional angels are a category of investors primarily comprised of retired entrepreneurs.

Placing a value on your startup is the first thing you should do when raising a round of angel investment.

The company planning a public offering must first select an investment bank.