Question 1

The largest percentage of venture capital funding is invested in:

Accepted Answer

A) seed capital. 
B) start-up capital. 
C) expansion funds. 
D) acquisition funds. 
A) seed capital. 
B) start-up capital. 
C) expansion funds. 
D) acquisition funds.

Question 2

The present value of future cash flow method of valuation considers the firm's cash flow in relation to the time value of money.

Accepted Answer

A) True 
 B)False

Question 3

The longest stage of the venture capital process,at 1-3 months,is:

Accepted Answer

A) preliminary screening. 
B) final approval. 
C) agreement on principal terms. 
D) due diligence. 
A) preliminary screening. 
B) final approval. 
C) agreement on principal terms. 
D) due diligence.

Question 4

Identify and describe,in order,each of the major stages of the venture capital process.
A.Preliminary screening - a good business plan is essential in the venture-capital process.As the starting point,the business plan must have a clear-cut mission and clearly stated objectives that are supported by an in-depth industry and market analysis and pro forma income statements.The executive summary is an important part of this business plan,as it is used for initial screening in this preliminary evaluation.Many business plans are never evaluated beyond the executive summary.When evaluating the business,the venture capitalist first determines if the deal or similar deals have been seen previously.The investor then determines if the proposal fits his or her long-term policy and short-term needs in developing a portfolio balance.In this preliminary screening,the venture capitalist investigates the economy of the industry and evaluates whether he or she has the appropriate knowledge and ability to invest in that industry.The investor reviews the numbers presented to determine whether the business can reasonably deliver the ROI required.In addition,the credentials and capability of the management team are evaluated to determine if they can carry out the plan presented.
B.Agreement on principal terms - the venture capitalist wants a basic understanding of the principal terms of the deal at this stage of the process before making the major commitment of time and effort involved in the formal due diligence process.
C.Due Diligence - there is a detailed review of the company's history,the business plan,the resumes of the individuals,their financial history,and target market customers.The upside potential and downside risk are assessed,and there is a thorough evaluation of the markets,industry,finances,suppliers,customers,and management.Process takes from one to three months.
D.Final approval - a comprehensive,internal investment memorandum is prepareD.This document reviews the venture capitalist's findings and details the investment terms and conditions of the investment transaction.This information is used to prepare the formal legal documents that both the entrepreneur and venture capitalist will sign to finalize the deal.

Accepted Answer

Preliminary screening - a good business

Question 5

The waiting period is the time between:

Accepted Answer

A) hiring an underwriter and waiting to file the registration statement. 
B) filing the registration statement and the SEC's reviewing to determine the adequacy of the disclosure. 
C) the initial filing of the registration statement and its effective date. 
D) after the initial public offering has been sold and before the listing. 
A) hiring an underwriter and waiting to file the registration statement. 
B) filing the registration statement and the SEC's reviewing to determine the adequacy of the disclosure. 
C) the initial filing of the registration statement and its effective date. 
D) after the initial public offering has been sold and before the listing.

Question 6

In most of the significant public offerings,the company technically sells the shares to the underwriters,who then resell the shares to the public investors.

Accepted Answer

A) True 
 B)False

Question 7

The public equity market is available only for high-potential ventures.

Accepted Answer

A) True 
 B)False

Question 8

Early stage financing is typically:

Accepted Answer

A) easier to obtain than expansion financing. 
B) called seed or start-up capital. 
C) where venture capitalists are highly involved. 
D) used as working capital to support initial growth. 
A) easier to obtain than expansion financing. 
B) called seed or start-up capital. 
C) where venture capitalists are highly involved. 
D) used as working capital to support initial growth.

Question 9

Sales of stock within an individual state are regulated by:

Accepted Answer

A) the Securities and Exchange Commission. 
B) the NASD. 
C) the Internal Revenue Service. 
D) blue sky examiners. 
A) the Securities and Exchange Commission. 
B) the NASD. 
C) the Internal Revenue Service. 
D) blue sky examiners.

Question 10

The best source of funds for first-stage financing is the:

Accepted Answer

A) private venture capital companies. 
B) small business investment companies. 
C) informal risk capital market. 
D) public equity market. 
A) private venture capital companies. 
B) small business investment companies. 
C) informal risk capital market. 
D) public equity market.

Question 11

Discuss the informal risk-capital market and key characteristics of business angels.

Accepted Answer

key points:
most misunderstood
largest p

Question 12

Venture capitalists view going public a highly disadvantageous step since the level of risks involved substantially increase.

Accepted Answer

A) True 
 B)False

Question 13

The return on investment ratio measures the ability of the firm to repay long-term debt using current assets.

Accepted Answer

A) True 
 B)False

Question 14

Business angels find many of their deals through friends,investment bankers,business brokers and other business associates.

Accepted Answer

A) True 
 B)False

Question 15

The shorter the time before a company goes public,given that profits and sales growth occur,the less percentage of equity the entrepreneur will have to give up per dollar invested.

Accepted Answer

A) True 
 B)False

Question 16

A venture capitalist would rather invest in a first-rate product and a second-rate management team than the reverse.

Accepted Answer

A) True 
 B)False

Question 17

SBIC firms are small companies with some government money that invest in other companies.

Accepted Answer

A) True 
 B)False

Question 18

The due diligence phase of the venture-capital process includes:

Accepted Answer

A) outlining the principle terms. 
B) a detailed review of the company's history. 
C) preparation of an investment memorandum. 
D) a preliminary study of the business plan. 
A) outlining the principle terms. 
B) a detailed review of the company's history. 
C) preparation of an investment memorandum. 
D) a preliminary study of the business plan.

Question 19

For the venture capitalist,the executive summary is an important part of the business plan.

Accepted Answer

A) True 
 B)False

Question 20

To attract venture capital funding,an investment must have significant capital appreciation potential.

Accepted Answer

A) True 
 B)False

The largest percentage of venture capital funding is invested in:

The present value of future cash flow method of valuation considers the firm's cash flow in relation to the time value of money.

The longest stage of the venture capital process,at 1-3 months,is:

The waiting period is the time between:

In most of the significant public offerings,the company technically sells the shares to the underwriters,who then resell the shares to the public investors.

The public equity market is available only for high-potential ventures.

Early stage financing is typically:

Sales of stock within an individual state are regulated by:

The best source of funds for first-stage financing is the:

Discuss the informal risk-capital market and key characteristics of business angels.

Venture capitalists view going public a highly disadvantageous step since the level of risks involved substantially increase.

The return on investment ratio measures the ability of the firm to repay long-term debt using current assets.

Business angels find many of their deals through friends,investment bankers,business brokers and other business associates.

The shorter the time before a company goes public,given that profits and sales growth occur,the less percentage of equity the entrepreneur will have to give up per dollar invested.

A venture capitalist would rather invest in a first-rate product and a second-rate management team than the reverse.

SBIC firms are small companies with some government money that invest in other companies.

The due diligence phase of the venture-capital process includes:

For the venture capitalist,the executive summary is an important part of the business plan.

To attract venture capital funding,an investment must have significant capital appreciation potential.

Entrepreneurship and the Entrepreneurial Mind-Set

Entrepreneurial Intentions and Corporate Entrepreneurship

Entrepreneurial Strategy: Generating and Exploiting New Entries

Creativity and the Business Idea

Identifying and Analyzing Domestic and International Opportunities

Intellectual Property and Other Legal Issues for the Entrepreneur

The Business Plan: Creating and Starting the Venture

The Marketing Plan

The Organizational Plan

The Financial Plan

Sources of Capital

Strategies for Growth and Managing the Implication of Growth

Accessing Resources for Growth From External Sources

Succession Planning and Strategies for Harvesting and Ending the Venture

Filters

Exam 12: Informal Risk Capital, Venture Capital, and Going Public

The largest percentage of venture capital funding is invested in:

The present value of future cash flow method of valuation considers the firm's cash flow in relation to the time value of money.

The longest stage of the venture capital process,at 1-3 months,is:

The waiting period is the time between:

In most of the significant public offerings,the company technically sells the shares to the underwriters,who then resell the shares to the public investors.

The public equity market is available only for high-potential ventures.

Early stage financing is typically:

Sales of stock within an individual state are regulated by:

The best source of funds for first-stage financing is the:

Discuss the informal risk-capital market and key characteristics of business angels.

Venture capitalists view going public a highly disadvantageous step since the level of risks involved substantially increase.

The return on investment ratio measures the ability of the firm to repay long-term debt using current assets.

Business angels find many of their deals through friends,investment bankers,business brokers and other business associates.

The shorter the time before a company goes public,given that profits and sales growth occur,the less percentage of equity the entrepreneur will have to give up per dollar invested.

A venture capitalist would rather invest in a first-rate product and a second-rate management team than the reverse.

SBIC firms are small companies with some government money that invest in other companies.

The due diligence phase of the venture-capital process includes:

For the venture capitalist,the executive summary is an important part of the business plan.

To attract venture capital funding,an investment must have significant capital appreciation potential.

Entrepreneurship and the Entrepreneurial Mind-Set

Entrepreneurial Intentions and Corporate Entrepreneurship

Entrepreneurial Strategy: Generating and Exploiting New Entries

Creativity and the Business Idea

Identifying and Analyzing Domestic and International Opportunities

Intellectual Property and Other Legal Issues for the Entrepreneur

The Business Plan: Creating and Starting the Venture

The Marketing Plan

The Organizational Plan

The Financial Plan

Sources of Capital

Strategies for Growth and Managing the Implication of Growth

Accessing Resources for Growth From External Sources

Succession Planning and Strategies for Harvesting and Ending the Venture

Filters