Question 1

According to the textbook, the unique value provided by business angels is:

Accepted Answer

A)  they are willing to make relatively large investments 
B)  they are willing to make relatively small investments 
C)  they require a fairly low rate of return on their money 
D)  they invest money but typically don't take a seat on a company's board of directors 
E)  they are easy to find 
A)  they are willing to make relatively large investments 
B)  they are willing to make relatively small investments 
C)  they require a fairly low rate of return on their money 
D)  they invest money but typically don't take a seat on a company's board of directors 
E)  they are easy to find

Question 2

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?

Accepted Answer

A)  cash flow challenges 
B)  marketing costs 
C)  personnel costs 
D)  capital investments 
E)  lengthy product development cycles 
A)  cash flow challenges 
B)  marketing costs 
C)  personnel costs 
D)  capital investments 
E)  lengthy product development cycles

Question 3

Venture capital involves getting a loan or selling corporate bonds.

Accepted Answer

A) True 
 B)False

Question 4

Historically, the vast majority of SBIR Phase 1 proposals are approved.

Accepted Answer

A) True 
 B)False

Question 5

The SBIR and STTR programs are two important sources of early stage funds for technology firms.

Accepted Answer

A) True 
 B)False

Question 6

Equity financing (or funding) means:

Accepted Answer

A)  exchanging partial ownership in a firm, usually in the form of stock, for funding 
B)  getting a grant or outright gift 
C)  getting a loan 
D)  getting a lease 
E)  getting a loan guarantee 
A)  exchanging partial ownership in a firm, usually in the form of stock, for funding 
B)  getting a grant or outright gift 
C)  getting a loan 
D)  getting a lease 
E)  getting a loan guarantee

Question 7

Which of the following statements is incorrect regarding equity funding?

Accepted Answer

A)  Equity investors expect to get their money back, along with a substantial capital gain, through the sale of their stock. 
B)  Angel investors are a common source of equity funding. 
C)  Equity funding is not a loan. 
D)  Equity investors are very demanding. 
E)  Equity investors fund the majority of the plans they consider. 
A)  Equity investors expect to get their money back, along with a substantial capital gain, through the sale of their stock. 
B)  Angel investors are a common source of equity funding. 
C)  Equity funding is not a loan. 
D)  Equity investors are very demanding. 
E)  Equity investors fund the majority of the plans they consider.

Question 8

The SBIR is a ________, meaning that firms that qualify have the potential to receive more than one grant to fund a particular proposal.

Accepted Answer

A)  two-phase program 
B)  three-phase program 
C)  six-phase program 
D)  nine-phase program 
E)  twelve-phase program 
A)  two-phase program 
B)  three-phase program 
C)  six-phase program 
D)  nine-phase program 
E)  twelve-phase program

Question 9

Angel investors, private placement, venture capital, and initial public offerings are the most common sources of equity funding.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a source of equity funding?

Accepted Answer

A)  initial public offering 
B)  angel investors 
C)  private placement 
D)  venture capital 
E)  government grants 
A)  initial public offering 
B)  angel investors 
C)  private placement 
D)  venture capital 
E)  government grants

Question 11

The number of angel investors in the United States has decreased dramatically over the past decade.

Accepted Answer

A) True 
 B)False

Question 12

Jason Graham's startup, which is in the electronics industry, was launched on January 1, 2009. However, prior to its formal launch, Jason spent many hours working on his business, particularly during the feasibility analysis stage. The time and effort that entrepreneurs put into their venture, that can't be easily measured from a financial point of view, is referred to as:

Accepted Answer

A)  effort equity 
B)  intangible equity 
C)  sweat equity 
D)  worry equity 
E)  fret equity 
A)  effort equity 
B)  intangible equity 
C)  sweat equity 
D)  worry equity 
E)  fret equity

Question 13

The vast majority of founders contribute personal funds along with sweat equity to their ventures.

Accepted Answer

A) True 
 B)False

Question 14

A(n) ________ is a written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for payments.

Accepted Answer

A)  assurance 
B)  loan 
C)  guarantee 
D)  warranty 
E)  lease 
A)  assurance 
B)  loan 
C)  guarantee 
D)  warranty 
E)  lease

Question 15

According to the textbook, many entrepreneurs go about the task of raising capital haphazardly because:

Accepted Answer

A)  they are uncomfortable talking about money and they haven't written a business plan 
B)  they lack experience in this area and because they don't know much about their choices 
C)  they are focused on the nuts and bolts of starting their business 
D)  they haven't completed a feasibility analysis or business plan 
E)  they are intimidated by the process and they are unsure of how much money they need 
A)  they are uncomfortable talking about money and they haven't written a business plan 
B)  they lack experience in this area and because they don't know much about their choices 
C)  they are focused on the nuts and bolts of starting their business 
D)  they haven't completed a feasibility analysis or business plan 
E)  they are intimidated by the process and they are unsure of how much money they need

Question 16

inDinero, the company profiled in the opening feature for Chapter 10, is described by its cofounders as "the fastest way for small businesses to manage their finances." Which of the following is not true about inDinero's founding story?

Accepted Answer

A)  In 2009, inDineor's founders applied to TechStars, which is a Boulder, CO-based seed-stage fund/incubator, and were turned down. 
B)  The idea for inDinero originated in mid-2009 while its cofounders were still in college. 
C)  In April 2010, the founders of inDinero applied to Y Combinator, an organization that provides seed-stage funding, mentorship, and networking opportunities to participants, and were turned down. 
D)  inDinero reportedly has over 15,000 users . 
E)  In late 2009 and early 2010, the founders of inDinero tried to raise angel funding and were unsuccessful. 
A)  In 2009, inDineor's founders applied to TechStars, which is a Boulder, CO-based seed-stage fund/incubator, and were turned down. 
B)  The idea for inDinero originated in mid-2009 while its cofounders were still in college. 
C)  In April 2010, the founders of inDinero applied to Y Combinator, an organization that provides seed-stage funding, mentorship, and networking opportunities to participants, and were turned down. 
D)  inDinero reportedly has over 15,000 users . 
E)  In late 2009 and early 2010, the founders of inDinero tried to raise angel funding and were unsuccessful.

Question 17

For startup firms, some products are under development for years before they generate earnings. The upfront costs often exceed a firm's ability to fund these activities on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

Accepted Answer

A)  cash flow challenges 
B)  marketing costs 
C)  capital investments 
D)  personnel costs 
E)  lengthy product development cycles 
A)  cash flow challenges 
B)  marketing costs 
C)  capital investments 
D)  personnel costs 
E)  lengthy product development cycles

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A(n) ________ is an institution, such as Credit Suisse First Boston, that acts as an underwriter or agent for a firm engaged in an initial public offering.

Accepted Answer

A)  venture bank 
B)  statutory bank 
C)  fiduciary bank 
D)  investment bank 
E)  public bank 
A)  venture bank 
B)  statutory bank 
C)  fiduciary bank 
D)  investment bank 
E)  public bank

Question 20

Which of the following was not identified in the textbook as a common (and sound) bootstrapping strategy?

Accepted Answer

A)  coordinate purchases with other businesses 
B)  hire interns 
C)  minimize personal expenses 
D)  buy rather than lease equipment 
E)  obtain payments in advance from customers 
A)  coordinate purchases with other businesses 
B)  hire interns 
C)  minimize personal expenses 
D)  buy rather than lease equipment 
E)  obtain payments in advance from customers

According to the textbook, the unique value provided by business angels is:

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?

Venture capital involves getting a loan or selling corporate bonds.

Historically, the vast majority of SBIR Phase 1 proposals are approved.

The SBIR and STTR programs are two important sources of early stage funds for technology firms.

Equity financing (or funding) means:

Which of the following statements is incorrect regarding equity funding?

The SBIR is a ________, meaning that firms that qualify have the potential to receive more than one grant to fund a particular proposal.

Angel investors, private placement, venture capital, and initial public offerings are the most common sources of equity funding.

Which of the following is not a source of equity funding?

The number of angel investors in the United States has decreased dramatically over the past decade.

The vast majority of founders contribute personal funds along with sweat equity to their ventures.

A(n) ________ is a written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for payments.

According to the textbook, many entrepreneurs go about the task of raising capital haphazardly because:

inDinero, the company profiled in the opening feature for Chapter 10, is described by its cofounders as "the fastest way for small businesses to manage their finances." Which of the following is not true about inDinero's founding story?

For startup firms, some products are under development for years before they generate earnings. The upfront costs often exceed a firm's ability to fund these activities on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

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

A(n) ________ is an institution, such as Credit Suisse First Boston, that acts as an underwriter or agent for a firm engaged in an initial public offering.

Which of the following was not identified in the textbook as a common (and sound) bootstrapping strategy?

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Preparing the Proper Ethical and Legal Foundation

Assessing a New Ventures Financial Strength and Viability

Building a New Venture Team

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Franchising

Filters

Exam 10: Getting Financing or Funding

According to the textbook, the unique value provided by business angels is:

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?

Venture capital involves getting a loan or selling corporate bonds.

Historically, the vast majority of SBIR Phase 1 proposals are approved.

The SBIR and STTR programs are two important sources of early stage funds for technology firms.

Equity financing (or funding) means:

Which of the following statements is incorrect regarding equity funding?

The SBIR is a ________, meaning that firms that qualify have the potential to receive more than one grant to fund a particular proposal.

Angel investors, private placement, venture capital, and initial public offerings are the most common sources of equity funding.

Which of the following is not a source of equity funding?

The number of angel investors in the United States has decreased dramatically over the past decade.

The vast majority of founders contribute personal funds along with sweat equity to their ventures.

A(n) ________ is a written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for payments.

According to the textbook, many entrepreneurs go about the task of raising capital haphazardly because:

inDinero, the company profiled in the opening feature for Chapter 10, is described by its cofounders as "the fastest way for small businesses to manage their finances." Which of the following is not true about inDinero's founding story?

For startup firms, some products are under development for years before they generate earnings. The upfront costs often exceed a firm's ability to fund these activities on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

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

A(n) ________ is an institution, such as Credit Suisse First Boston, that acts as an underwriter or agent for a firm engaged in an initial public offering.

Which of the following was not identified in the textbook as a common (and sound) bootstrapping strategy?

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Preparing the Proper Ethical and Legal Foundation

Assessing a New Ventures Financial Strength and Viability

Building a New Venture Team

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Franchising

Filters