Exam 13: Obtaining Venture and Growth Capital

What are the three central issues that should be considered when beginning to think about obtaining investment capital?

A private placement has an unlimited audience;hence,it requires more regulatory paperwork than a public offering.

The more mature a company is when it makes a public offering,the higher the equity given up by the founders for the required capital.

Regulation D is the result of the first cooperative effort by the small business investment companies (SBICs)to develop customized exemptions from securities registration for small issuers.

Going public enables a firm to raise more capital with less dilution than occurs with private placements or venture capital through a higher valuation.

If the goal of a company is to raise a specific amount of capital in a short time,it can opt for private placements.

A(n)______ raises capital through federally registered and underwritten sales of a company's shares.

With mezzanine financing,the principle amount may be converted into equity.

What is the size of funds provided by mainstream venture capitalists?

ESOP stands for ____.

It is best to be vague about other investors one is considering for a venture while discussing with a potential venture capitalist.

Angels or wealthy individuals are often sought because the evaluations they provide of potential investments are more thorough than formal investors.

What is the best way for an entrepreneur to learn about the reputation of a particular venture capital firm?

Most organizations that are funded by venture capital investors are in the form of ____.

An equity investment requires that the management team firmly believe that investors can and will add value to the venture.

Discuss how timing is a critical aspect of raising risk capital.

Describe the stages in the venture capital fund investing process,including fund formation and adding value to investments.

Employee stock ownership plans (ESOPs)are potential sources of funding used by existing companies that have low to moderate confidence in the stability of their future earnings and cash flow.

A venture should look for capital only when it has a serious cash shortage.

A typical informal investor is not appropriate for funding high-technology inventors that have not developed a prototype.