Exam 14: The Deal: Valuation, Structure, and Negotiation

The rate of return (ROR)required by the investor can affect the investor's required share of the ownership.

By _____ their capital contributions,venture capitalists maintain the right to abandon a project whose prospects look dim.

Investors stage their capital commitments as a way to motivate the entrepreneurial team.

In the venture capital valuation method,terminal value is found by multiplying net income and the P/E ratio.

Explain how legal circumference relates to fund raising.

In the context of venture capital investment,discuss the consequences of venturing into an unknown territory.

What rate of return (ROR)will a venture capital investor seek from a first stage investment?

A venture capitalist is investing $5 million to acquire 200,000 shares.What is the price per share?

Explain how strategic circumference relates to fund raising.

A cram-down round is an investment round where follow-on investors are compelled by favorable conditions to accept a higher valuation than they would prefer.

In the case of a private company raising money,what is the most critical element of valuation?

A company currently has 500,000 shares outstanding,which are owned by the current owners.If the venture capitalist requires a 28.5 percent ownership,what will be the total number of shares outstanding after the investment?

Investors do not discontinue funding to ventures that are economically viable.