New Venture Finance Startup Funding for Entrepreneurs Answer. In this post you will get Quiz Answer Of New Venture Finance Startup Funding for Entrepreneurs
New Venture Finance Startup Funding for Entrepreneurs
Offered By ”University of Maryland, College Park”
Week- 1
Early Stage Investment Landscape
1.
Question 1
Anti-dilution provisions in financing documents protect:
1 point
- (a) founders, by preventing their ownership in a company from being significantly reduced by new investors
- (b) investors from dilution in the event of stock splits, stock dividends or sales of stock at a price lower than that the investor paid
- (c) employees who have options issued from the company’s option pool
- (d) both (a) and (b)
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2.
Question 2
Bridge financing is a term that means:
1 point
- An interim financing round that provides cash to a company that is anticipating either a larger financing round, a merger or an initial public offering
- A special kind of construction loan
- An interim financing round that provides cash to a company that “bridges” the gap between cash on hand and the next monthly payroll
- None of the above
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3.
Question 3
The key components of a business plan are:
1 point
- Income Statement, Balance Sheet, Cash Flow Statement
- Company Description, Product Description, Market Analysis, Headcount Plan, Customer List, Patents
- Executive Summary, Company Description, Product/Service Description, Market Opportunity, Sales & Marketing Plan, Management Team, Financial Projections
- Early-stage companies do not need to write business plans because they new to the market and too many variables are unknown
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4.
Question 4
The 4 “M’s” that investors look for in a company are:
1 point
- Momentum, Management Team, Market Potential, Money
- Monthly Sales, Management Team, Money, Mystery
- Momentum, Monthly Sales, Money, Management Team
- None of the above
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5.
Question 5
Which of the following is false about a Term Sheet?
1 point
- It includes the pre-money valuation of the company.
- It is binding on the investor for 60 days.
- It specifies the use of proceeds.
- It specifies the form of investment.
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6.
Question 6
The primary purpose of the ‘cap’ in a convertible note is:
1 point
- To convert into equity at the value of the next round of financing, regardless of the valuation of that round.
- To delay the valuation of an early-stage company.
- To establish an arbitrary valuation of an early-stage company.
- To place a ceiling on the valuation at which the note converts into equity.
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7.
Question 7
Series A, Series B and Series C preferred refers to the:
1 point
- Value of the preferred stock.
- Priority of the preferred stock in liquidation.
- Class of the preferred stock.
- Nothing – they are simply given a letter to distinguish each preferred stock issuance.
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8.
Question 8
An investor invests $2.5 million on $5 million post-money valuation in a participating Preferred Stock. The company subsequently sells for $10 million. What is the ownership of the Preferred investor and how much of the $10 million will the investor receive?
1 point
- 33%; $3.3 million.
- 50%; $5 million.
- 50%; $6.25 million.
- 33%; $5 million.
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9.
Question 9
Which of the following statements about a balance sheet is correct?
1 point
- Assets = Liabilities + Equity
- Equity = Assets – Liabilities
- Liabilities = Assets – Equity
- All of the above
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10.
Question 10
What is the simplest form of corporate structure?
1 point
- General partnership
- Limited partnership
- Unincorporated sole proprietorship
- Limited liability company (LLC)
NEWCO Project
QUESTION 1: What is NEWCO’s cash balance on December 31, 2014?
1 point
- $34,000
- $68,000
- $17,000
- $6,800
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2.
Question 2
What is the balance of convertible notes (including accrued interest) at December 31, 2014?
1 point
- $247,500
- $150,000
- $82,500
- $165,000
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3.
Question 3
What is NEWCO’s Shareholders’ Equity at December 31, 2014?
1 point
- $(22,500)
- $(4,400)
- $(116,000)
- $(45,000)
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4.
Question 4
What is NEWCO’s pre-tax income or loss for the year 2014?
1 point
- Gain of $117,000
- Gain of $67,000
- Loss of $67,000
- Loss of $117,000
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5.
Question 5
Deferred revenues are revenues that have been booked (contracted for) but not yet earned as of a reporting date. What is Newco’s deferred revenue balance at December 31, 2014?
1 point
- $120,000
- $65,000
- $220,000
- $240,000
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6.
Question 6
What is the accrued expense balance on the balance sheet at December 31, 2014?
1 point
- $8,000
- $4,000
- $16,000
- $12,000
Week- 2
Sources of Capital
1.
Question 1
Early stage companies, owing to the lack of history and collateral, rarely raise money via debt with one notable exception, which is:
1 point
Common stock
Preferred stock, with a dividend that acts like an interest rate
Shareholder loans
Convertible notes, which are a hybrid, more closely related to equity
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2.
Question 2
Which of the following is TRUE regarding intermediary sources of capital? (Select all that apply.)
1 point
This category includes investment bankers.
They can introduce you to other financing sources.
They are a prime source of early-stage capital.
They may charge a fee for their services.
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3.
Question 3
Strategic or corporate venture capital firms make investments:
1 point
Only to achieve financial returns
To build risk portfolios with excess cash of the corporation
Primarily outside of their core businesses to diversify their risk
Within their core businesses to achieve financial and strategic returns
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4.
Question 4
The primary sources of seed and early stage capital include the following: (Select all that apply.)
1 point
IPO’s
Angel investors
Founders
Management team
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5.
Question 5
Which of the following statements is CORRECT about friends and family investors? (Select all that apply.)
1 point
When discussing an investment with a friends and family investor, the entrepreneur should clearly discuss risk versus reward
They invest because of the relationship to the founder(s)
Only equity investments are allowed given the relationship to the founder
Terms should always be put into writing
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6.
Question 6
According to the U.S. Federal Reserve, what percentage of all startups are bootstraped?
1 point
About 50%
Almost 90%
Less than 20%
More than 70%
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7.
Question 7
What is the primary benefit to the entrepreneur of bootstrapping his/her company:
1 point
It allows the entrepreneur to be creative in finding ways to achieve progress without money
If successful, the entrepreneur retains a greater share of the exit value (or a higher valuation during fund raising)
Bartering with established companies develop lasting relationships that would not otherwise be developed
The longer time it takes to get to market allows the entrepreneur time to make sure the product works perfectly
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8.
Question 8
One of the disadvantages of an entrepreneur going into an accelerator program is that the entrepreneur:
1 point
Spends too much time receiving training that strengthens his/her business expertise
Spends a lot of time meeting investors interested in future financing rounds
Must give up equity to participate
Is often provided new office space
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9.
Question 9
Which of the following is true about angel investors:
1 point
They invest twice as much as venture capital funds do each year
They provide critical seed capital that other funding sources do not focus on
They are often motivated by factors other than financial return
All of the above
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10.
Question 10
Seed or early stage investors typically invest in companies that have all of the following attributes: (Select all that apply.)
1 point
A promising product concept
Early customer validation
Is at cash flow break even
Is seeking funding of $5 million or less
Project – Sources of Capital
QUESTION 1: How much cash do you need to raise to operate during the first 12 months of operations? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 346362 |
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2.
Question 2
Does the amount of cash needed in item 1 above fall within the “reasonableness range” for an early stage company (i.e., up to $5 million)? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 56742 |
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3.
Question 3
What is your monthly cash burn rate – both gross and net burn (gross burn is the average of total expenses each month; net burn is gross burn offset by the average monthly cash generated from revenues). Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 436344 |
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4.
Question 4
How long will you be able to operate at the end of the 12 months forecast before you need to raise additional funding? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 54353 |
Week- 3
Principles of Funding Strategies
1.
Question 1
Which of the following statements is correct about the due diligence process? (Select all that apply.)
1 point
The key to success in due diligence is advance preparation and cooperation among the parties
Due diligence is a two-way process
Prospective investors will want to investigate legal, financial and strategic matters
Due diligence is not time consuming if done properly
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2.
Question 2
Which of the following items discovered in the due diligence process could be a cause for concern by an investor, which could ultimately lead to a decision by the investor to NOT invest?
1 point
Accounts receivable from 20 very small customers which are 10 days past due
A large shareholder loan that will be paid upon completion of the current financing
Large accounts payable for goods and services that are all “current” (i.e., within the terms offered by the vendor)
Significant related party transactions that are properly documented and performed on an arms-length basis
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3.
Question 3
When negotiating terms sheets with prospective investors, which of the following are correct? (Select all that apply.)
1 point
Don’t take everything the other side says at face value – they may be posturing.
Both the investor and entrepreneur need to win.
Experience from past deals should be used to negotiate the current term sheet.
Compromise indicates to the investor that the entrepreneur is desperate for funding.
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4.
Question 4
Valuation of startup companies can be done objectively by following traditional valuation methods.
1 point
True
False
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5.
Question 5
Choose the statement that is NOT correct?
1 point
The Wiltbank Study indicates that investors expect an IRR of 15% in six years
Post-money valuation = Exit Value ÷ ROI
If the average PE ratio of companies similar to your company in the industry in which you will operate is 15X, and your projected after tax earnings in year 5 is $3 million, a reasonable exit valuation for your company in year 5 is $45 million
ROI = Exit Value ÷ Post-money valuation
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6.
Question 6
What factor(s) can impact the valuation of your company?
1 point
Hot sectors
Management team experience
Early traction (revenues, partnerships, etc.)
A well developed V1 product
All of the above
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7.
Question 7
Which of the following statements about term sheets is correct? (Select all that apply.)
1 point
They are binding on the investor for 60 days.
No shop clauses are beneficial to the investor but not the company.
They normally include a statement on the use of the proceeds of the investment.
They state the pre-money valuation and the amount of the investment.
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8.
Question 8
Equity securities include all of the following: (Select all that apply.)
1 point
Warrants
Preferred stock
Convertible notes
Options
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9.
Question 9
A cap on a convertible note is used to:
1 point
Put a value on the company
Put a limit on the maximum interest rate payable on the note
Establish the maximum pre-money valulation at which the note will convert
Secure the payment of the note upon liquidation
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10.
Question 10
Which of the following is not a characteristic of Preferred Stock?
1 point
Preferred stock is an equity instrument with some characteristic of debt
Preferred stock shareholders receive the greater of the original purchase plus accrued dividends OR a percentage of the liquidation proceeds on an ‘as-converted” basis in a standard liquidation of the company
Anti-dilution provisions protect the preferred shareholder’s pro-rata interests
It is the financing vehicle of choice for venture capitalists
Create a Funding Strategy for a New Venture Concept
QUESTION 1: Assuming the investor is investing $750,000, what is the average exit value? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 43232 |
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2.
Question 2
Assuming the investor is investing $750,000, what is the post-money value? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 46763 |
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3.
Question 3
Assuming the investor is investing $750,000, what is the pre-money value? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 46532 |
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4.
Question 4
Assuming the investor is investing $750,000, what is the post-money ownership for the investor? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 97675 |
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5.
Question 5
Assuming the investor is investing $750,000, what is the post-money ownership for the founders/ owners? Please include your numeric answer and an explanation of several sentences.
1 point
Enter answer here
| 567684 |
Week- 3
Fundamentals of “The Pitch”
1.
Question 1
Which of the following statements is correct about what prospective investors want to see when you pitch your company to them? (Select all that apply.)
1 point
Your company should be in a new industry where the investor has not made previous investments to enable the investor to diversify his/her risk
Investors don’t care how or if your product works because they assume it does or will
Why customers will buy your product/solution
You and your team have an in-depth knowledge of the market
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2.
Question 2
When an entrepreneur tells an investor “I have no competition”, what the investor hears and thinks is:
1 point
(a) The market the entrepreneur is going after must not be very big if no other competitors are entering it
(b) That’s great! This entrepreneur is pretty smart to have built a product in a big market that has no competing products to worry about
(c) This entrepreneur doesn’t know the market very well
(d) Both a and c
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3.
Question 3
What is Guy Kawasaki’s 10/20/30 rule?
1 point
10 slides, 20 minutes, 30-point font
10-point font, 20 slides, 30 minutes
10 minutes, 20-point font, 30 slides
None of the above
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4.
Question 4
What is the one attribute of every “perfect” pitch deck, regardless of its size?
1 point
They tell a compelling story.
They have an appendix with additional slides not covered during the actual pitch session.
They all have at least one embedded video.
They have bright colors, professional fonts and creative graphics to enhance the presentation.
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5.
Question 5
When discussing/presenting the Competition slide in a pitch deck, which of the following statements is correct?
1 point
If there is no competition in your market, this slide is unnecessary.
Point out why your product or solution is better but never “knock” the competition.
Highlight how bad the competitors’ product is.
Never discuss competitive products by name – otherwise, your prospective investors may seek out your competitors and invest in their products.
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6.
Question 6
The appendix is useful for:
1 point
Putting information into the deck that you want to have available in the event questions arise after the pitch to which these slides relate.
Nothing – an appendix should never be included in your pitch deck.
Providing a list of all slides in the deck.
Hiding problematic information that you’d rather not talk about.
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7.
Question 7
When you “tell your story” to prospectors, you should do all of the following: (Select all that apply.)
1 point
Be genuine, passionate and try to connect directly with the audience.
Discuss who you are, where you’re from and why you’re starting the company.
Be prepared to go into great details, especially if your business is complicated.
Tell interesting stories constructed from anecdotes from your life that an investor might think is interesting.
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8.
Question 8
Which of the following is a “Don’t” that should be avoided in making an investor pitch?
1 point
Reading your slides
Exaggerating
Focusing only on positives
All of the above
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9.
Question 9
Which of the following are “Do’s” of making a pitch: (Select all that apply.)
1 point
Highlight your and your management team’s prior successes.
Connect emotionally with the investor.
Give a product demo, if applicable.
Forecast ‘hockey stick’ growth to ensure the investor sees that market as having significant potential.
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10.
Question 10
Assuming that an entrepreneur must speak to between 10 to 15 prospective investors to actually have one investor “close”; that the amount of each investor’s investment is $50,000; and you are trying to raise a minimum of $1 million. How many prospective investors must the entrepreneur speak to before they successfully raise $1 million?
1 point
10 to 15
It is impossible to estimate based on the data provided.
200 to 300
100
Create “The Pitch” for a New Venture Concept
NOTE: Your submission with this assignment will not be shared with classmates, and will only be viewable by University and Coursera staff.
SUBMISSION: Please paste the URL to where you posted your pitch deck online. Include your presentation notes in the “notes” section below each slide. You may use Google Slides (http://www.google.com/slides/about/) or an alternate site.
1 point
Enter answer here
