Exam 13: Obtaining Venture and Growth Capital

Most venture capital funds are organized as partnerships,where the fund managers are the general partners and the investors are the limited partners.

Although corporate venture capitalists look for promising young companies on the verge of a spike in sales like traditional venture capitalists,corporations tend to be more risk-averse and specialized.

Farah is an engineer with an idea for a flexible solar energy material that would have a wide range of military and civilian applications.She estimates that she will need approximately $300,000 to develop a prototype.Friends and family could provide about $75,000.She contacts Natalie,an angel investor,for this purpose.In this case,which of the following is likely to be true?

Name three non-monetary capabilities a venture capitalist brings to an investment.

Creative bootstrapping strategies can preserve equity as long as it is done in an optimal way so the opportunity does not get away from the company.

What is the average number of hours that a venture capitalist will spend conducting due diligence on a promising venture?

One of the toughest trade-offs for any young company is to balance the need for startup and growth capital with preservation of equity.

Capital that is between senior debt financing and common stock is called ______ financing.

Companies preparing for initial public offerings (IPOs)are attractive to mezzanine investors.

An employee stock ownership plan (ESOP)is a tax-qualified retirement benefit plan that borrows money and uses the cash proceeds to buy a company's stock.

The investigation that an investor undertakes for verification of facts,backgrounds,and reputations of key people,market estimates,technical capabilities of a product,and proprietary rights refers to _____ on the part of the investor.

The subordinated-debt capital is generally unsecured,with a fixed coupon and maturity of ____.

Subordinated debt often carries an equity _____ consisting of warrants,or a conversion feature into common stock.

Salim,who runs a business,decides to invest in a high-technology inventor that has not developed a prototype yet.He requires about $60,000 and opts to seek an investor who adds more than money to this project.However,he realizes that the evaluation provided by this type of investor is not likely to be thorough.Which of the following does Salim consider as a potential investor for the new venture?

The greatest source of seed and startup capital comes from organized venture capital groups.

The single most important criterion for selecting an investor is the size of fund it can provide to an organization.

Which of the following is an advantage of an initial public offering (IPO)?

Which of the following industries would least likely attract mezzanine financing?

A private placement should not be offered after a company has already gone public.

Mezzanine capital does not require regular interest payments.