Exam 14: Obtaining Venture and Growth Capital

It is best to be vague about other investors you are speaking with.

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

Second tier venture capital funds prefer debt instruments to equity investments.

ESOP stands for ________.

Private placements are used for firms that are not in a position to pursue an IPO.

Mezzanine is a debt instrument that does not require regular interest payments.

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

If an entrepreneur has obtained a referral,he or she needs to get permission to use the name of the person making a referral when the investor is contacted.

What is the range fund size of mainstream venture capitalists?

What are the three central issues that should be considered when beginning to think about obtaining risk capital? (1)Does the venture need outside equity capital? (2)Do the founders want outside equity capital? and finally, (3)Who should invest?

When pushed by a promising investor to discuss what other firms/angels you are talking to,you should:

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

Effective entrepreneurs set up meetings that allow them to present to more than one informal investor at the same time.

An investment at a lower price than the previous round is called a ________.

While corporate venture capitalists are similar to traditional VCs in that they look for promising young companies on the verge of a spike in sales,corporations tend to be more risk-averse and specialized.

A central idea with obtaining risk capital is that a smaller percentage of a larger pie is preferred to a larger percentage of a smaller pie.

The venture capital investing process generally occurs over what time frame?

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

The verification of facts,backgrounds,and reputations of key people,market estimates,technical capabilities of the product,proprietary rights,and the like is an investigation for investors called ________.

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