Exam 10: Getting Financing or Funding

A lease 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.

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.

The idea candidate for a bank loan is a firm with a strong cash flow, low leverage, audited financial statements, good management, and a healthy balance sheet.

Individual must typically pledge all of their personal assets to secure an SBA guaranteed loan.

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

Debt financing involves:

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 Bills best friend in college, Kevin. The money that an entrepreneur raises in this manner is referred to as:

Why do most firms need funding? Provide a brief explanation of each reason.

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

Bizooki, the company profiled in the opening feature for Chapter 10, is a matchmaking service that brings together businesses that need Web sites built, CD-ROMs prepared, and similar services with a global network of providers. Andy Tabar, Bizooki's founder, has funded the company via:

According to a study cited in the textbook, ________ of private companies meet the criterion established by businesses angels for investment.

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?

What is the difference between equity funding and debt financing? What are the most common sources of equity funding and debt financing?

The three reasons start-ups need funding are:

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

Debt financing involves getting a loan or selling corporate bonds.

Venture-capital firms are ________ of money managers who raise money in "funds" to invest in start-ups and growing firms.

Historically, commercial banks have:

Which of the following statement is incorrect about grant programs?

Equity investors typically have a ________ investment horizon.