Question 1

Approximately 80 percent of the 9,000 banks in the United States participate in the SBA Guaranteed Loan Program.

Accepted Answer

A) True 
 B)False

Question 2

Most business angels remain fairly anonymous and are matched up with entrepreneurs through referrals.

Accepted Answer

A) True 
 B)False

Question 3

There are three common sources of "personal" financing for a startup firm: personal funds, friends and family, and bootstrapping.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  original public submission 
B)  first unrestricted offering 
C)  preemptive initial offering 
D)  original open offering 
E)  initial public offering 
A)  original public submission 
B)  first unrestricted offering 
C)  preemptive initial offering 
D)  original open offering 
E)  initial public offering

Question 5

Venture capital is money that is invested by venture capital firms in startups and small businesses with exceptional growth potential.

Accepted Answer

A) True 
 B)False

Question 6

There are two major advantages of getting a loan versus investment capital:

Accepted Answer

A)  the money doesn't have to be paid back and lenders typically take an active interest in their borrowers 
B)  banks are reliable sources of funding for startups and interest payments are tax deductible 
C)  the money doesn't have to be paid back and no ownership in the firm is surrendered 
D)  no ownership in the firm is surrendered and interest payments are tax deductible 
E)  banks are reliable sources of funding for startups and lenders typically take an active interest in borrowers 
A)  the money doesn't have to be paid back and lenders typically take an active interest in their borrowers 
B)  banks are reliable sources of funding for startups and interest payments are tax deductible 
C)  the money doesn't have to be paid back and no ownership in the firm is surrendered 
D)  no ownership in the firm is surrendered and interest payments are tax deductible 
E)  banks are reliable sources of funding for startups and lenders typically take an active interest in borrowers

Question 7

According to our textbook, the seed money that gets a company off the ground typically comes from:

Accepted Answer

A)  angel investors 
B)  venture capitalists 
C)  commercial banks 
D)  governmental agencies 
E)  the founders of the firm 
A)  angel investors 
B)  venture capitalists 
C)  commercial banks 
D)  governmental agencies 
E)  the founders of the firm

Question 8

An important part of obtaining venture capital funding is going through ________, which refers to the process of investigating the merits of a potential venture and verifying the key claims made by the business plan.

Accepted Answer

A)  appropriate diligence 
B)  fit diligence 
C)  due diligence 
D)  prior diligence 
E)  responsible diligence 
A)  appropriate diligence 
B)  fit diligence 
C)  due diligence 
D)  prior diligence 
E)  responsible diligence

Question 9

Historically, commercial banks:

Accepted Answer

A)  have been a good source of funds for startup firms 
B)  have not funded startup firms at all 
C)  have been a good source of funds for manufacturing firm startups but not for service firm startups 
D)  have been a good source of funds for service firm startups but not for manufacturing firm startups 
E)  have not been a good source of funds for startup firms 
A)  have been a good source of funds for startup firms 
B)  have not funded startup firms at all 
C)  have been a good source of funds for manufacturing firm startups but not for service firm startups 
D)  have been a good source of funds for service firm startups but not for manufacturing firm startups 
E)  have not been a good source of funds for startup firms

Question 10

According to a source cited in the textbook, venture capitalists anticipate that the percentage of investments that will be home runs is about ________ or less.

Accepted Answer

A)  20 percent 
B)  50 percent 
C)  5 percent 
D)  33 percent 
E)  45 percent 
A)  20 percent 
B)  50 percent 
C)  5 percent 
D)  33 percent 
E)  45 percent

Question 11

What is a business angel? Describe the prototypical business angel. How much money do business angels typically invest in a single company?

Accepted Answer

Business angels are individuals who inve

Question 12

Once a venture capitalist makes an investment in a firm, subsequent investments are made in rounds and are referred to as:

Accepted Answer

A)  later funding 
B)  successive funding 
C)  subsequent backing 
D)  follow-on funding 
E)  ensuing backing 
A)  later funding 
B)  successive funding 
C)  subsequent backing 
D)  follow-on funding 
E)  ensuing backing

Question 13

The What Went Wrong? feature in Chapter 10 focuses on GoCrossCampus, a company that developed a strategy game in which students from opposing schools competed online to conquer each other's campuses. Which of the following was not identified as one of the reasons that led to GoCrossCampus's failure?

Accepted Answer

A)  The company never generated the revenue it needed to be a viable ongoing business. 
B)  The fund-raising process was time-consuming. 
C)  Products were released quickly, and in some cases before they were ready. 
D)  Having five cofounders proved to be problematic. 
E)  The company was never able to raise investment capital. 
A)  The company never generated the revenue it needed to be a viable ongoing business. 
B)  The fund-raising process was time-consuming. 
C)  Products were released quickly, and in some cases before they were ready. 
D)  Having five cofounders proved to be problematic. 
E)  The company was never able to raise investment capital.

Question 14

Debt financing involves:

Accepted Answer

A)  raising venture capital or securing a private placement 
B)  selling corporate bonds or selling stock via an IPO 
C)  getting a grant or selling corporate bonds 
D)  getting a loan or raising venture capital 
E)  getting a loan or selling corporate bonds 
A)  raising venture capital or securing a private placement 
B)  selling corporate bonds or selling stock via an IPO 
C)  getting a grant or selling corporate bonds 
D)  getting a loan or raising venture capital 
E)  getting a loan or selling corporate bonds

Question 15

A brief carefully constructed statement that outlines the merits of a business opportunity is called a(n):

Accepted Answer

A)  subway speech 
B)  sway speech 
C)  bootstrap speech 
D)  teaser speech 
E)  elevator speech 
A)  subway speech 
B)  sway speech 
C)  bootstrap speech 
D)  teaser speech 
E)  elevator speech

Question 16

Bootstrapping is the use of creativity, ingenuity, and any means possible to obtain resources other than borrowing money or raising capital from traditional sources.

Accepted Answer

A) True 
 B)False

Question 17

Typically, the seed money that gets a company off the ground comes from a commercial bank.

Accepted Answer

A) True 
 B)False

Question 18

Debt financing means exchanging partial ownership in a firm in exchange for cash.

Accepted Answer

A) True 
 B)False

Question 19

Bill and Megan Tempelton are planning to open a smoothie restaurant near a large soccer complex in Greeley, Colorado, and need $75,000 to get started. They have $15,000 of their own money, which leaves $60,000. After getting turned down by a couple of banks, they decided to turn to their relatives and acquaintances for help. Fortunately, they were able to raise the money through a gift from Bill's grandfather, a loan from Megan's parents, and a small investment by Bill's best friend in college, Kevin. The money that an entrepreneur raises in this manner is referred to as:

Accepted Answer

A)  friends and family 
B)  bootstrapping 
C)  networking money 
D)  compassion money 
E)  legacy money 
A)  friends and family 
B)  bootstrapping 
C)  networking money 
D)  compassion money 
E)  legacy money

Question 20

For startup firms, the cost of buying real estate, building facilities, and purchasing equipment often exceeds the firm's ability to provide funds for those needs on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

Accepted Answer

A)  lengthy product development cycles 
B)  costs associated with building a brand 
C)  cash flow challenges 
D)  capital investments 
E)  personnel costs 
A)  lengthy product development cycles 
B)  costs associated with building a brand 
C)  cash flow challenges 
D)  capital investments 
E)  personnel costs

Approximately 80 percent of the 9,000 banks in the United States participate in the SBA Guaranteed Loan Program.

Most business angels remain fairly anonymous and are matched up with entrepreneurs through referrals.

There are three common sources of "personal" financing for a startup firm: personal funds, friends and family, and bootstrapping.

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

Venture capital is money that is invested by venture capital firms in startups and small businesses with exceptional growth potential.

There are two major advantages of getting a loan versus investment capital:

According to our textbook, the seed money that gets a company off the ground typically comes from:

An important part of obtaining venture capital funding is going through ________, which refers to the process of investigating the merits of a potential venture and verifying the key claims made by the business plan.

Historically, commercial banks:

According to a source cited in the textbook, venture capitalists anticipate that the percentage of investments that will be home runs is about ________ or less.

What is a business angel? Describe the prototypical business angel. How much money do business angels typically invest in a single company?

Once a venture capitalist makes an investment in a firm, subsequent investments are made in rounds and are referred to as:

The What Went Wrong? feature in Chapter 10 focuses on GoCrossCampus, a company that developed a strategy game in which students from opposing schools competed online to conquer each other's campuses. Which of the following was not identified as one of the reasons that led to GoCrossCampus's failure?

Debt financing involves:

A brief carefully constructed statement that outlines the merits of a business opportunity is called a(n):

Bootstrapping is the use of creativity, ingenuity, and any means possible to obtain resources other than borrowing money or raising capital from traditional sources.

Typically, the seed money that gets a company off the ground comes from a commercial bank.

Debt financing means exchanging partial ownership in a firm in exchange for cash.

For startup firms, the cost of buying real estate, building facilities, and purchasing equipment often exceeds the firm's ability to provide funds for those needs on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

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

Approximately 80 percent of the 9,000 banks in the United States participate in the SBA Guaranteed Loan Program.

Most business angels remain fairly anonymous and are matched up with entrepreneurs through referrals.

There are three common sources of "personal" financing for a startup firm: personal funds, friends and family, and bootstrapping.

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

Venture capital is money that is invested by venture capital firms in startups and small businesses with exceptional growth potential.

There are two major advantages of getting a loan versus investment capital:

According to our textbook, the seed money that gets a company off the ground typically comes from:

An important part of obtaining venture capital funding is going through ________, which refers to the process of investigating the merits of a potential venture and verifying the key claims made by the business plan.

Historically, commercial banks:

According to a source cited in the textbook, venture capitalists anticipate that the percentage of investments that will be home runs is about ________ or less.

What is a business angel? Describe the prototypical business angel. How much money do business angels typically invest in a single company?

Once a venture capitalist makes an investment in a firm, subsequent investments are made in rounds and are referred to as:

Debt financing involves:

A brief carefully constructed statement that outlines the merits of a business opportunity is called a(n):

Bootstrapping is the use of creativity, ingenuity, and any means possible to obtain resources other than borrowing money or raising capital from traditional sources.

Typically, the seed money that gets a company off the ground comes from a commercial bank.

Debt financing means exchanging partial ownership in a firm in exchange for cash.

For startup firms, the cost of buying real estate, building facilities, and purchasing equipment often exceeds the firm's ability to provide funds for those needs on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?

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