Chapter 12 Review

Which of the following is true about crowdsourcing? Crowdsourcing is a form of bootstrapping, because it is a valuable method of saving money. Crowdsourcing works by drawing on small contributions from a large number of people to fund entrepreneurial ventures. Crowdsourcing focuses on different ways of raising capital for new ventures. Crowdsourcing is effectively a digital form of conducting a focus group.

Crowdsourcing is a form of bootstrapping, because it is a valuable method of saving money

Crowdcube, Circle Up, and OurCrowd are examples of what type of crowdfunding site?

Equity crowdfunding

When it comes to crowdfunding, which of the following is NOT true?

If you create your crowdfunding campaign effectively, potential backers' questions will be answered through the campaign, saving you from answering a lot of emails.

Which of the following is considered to be an advantage of crowdfunding?

It can provide you with an idea of the level of enthusiasm and interest in your product or service before launch.

Manny's Cookies, LLC wants to launch a Kickstarter Campaign to crowdfund a new product line. All backers who fund the project will receive 1% equity for each US$1000 funded, up to a total of 5% equity. Kickstarter has told Manny's Cookies the project will not be allowed because it violated the Kickstarter rules. Which rule was violated?

Kickstarter does not allow monetary rewards or equity in a company as incentive to back project

Which of the following is a common bootstrapping strategy?

Offer discounts to early customers to ensure a consistent cash flow

Kickstarter is an example of a crowdfunding site in the _______ model.

Reward-based

What is a characteristic of the type of people who back crowdfunding campaigns?

The tend to have an annual income over $100,000

What is the purpose of bootstrapping?

To save money in creative ways

T/F: 98% of startup businesses begin without any formal investment

True