Finance

3. What is inbound open innovation? a. The organization leverages knowledge from external sources to enhance its innovation performances b. The organization commercializes through external paths c. Uses tools for a narrow search d. Not very common among firms e. knowledge which was developed internally

A

5. Which of the following is one of the major potential issues in seeking an investment from a corporate VC? a. A CVC may invest in you to kill or steal your idea because they have the resources to get your product/idea to the market faster. b. It may decrease their chances of getting financed by another VC. c. A competitor may want to work with you if the CVC's main competitor sees that you're working with them to steal you from them. d. You may reach the wrong market. e. The CVC may not have good resources for your company, and the mentors they offered do not care about your idea.

A

3. In terms of VC contracts and routines, which of the following demonstrates post valuation? a. Pre evaluation + investment b. Investment/ post evaluation c. Pre money valuation/post valuation d. Post valuation is the combination between staging milestones and syndication e. None of the above define post valuation

A

1. What is meant when a start-up company is bootstrapping? a. An entrepreneur starts a company with little capital and builds the company with personal finances or from the operating revenues of the new company, while not having to worry about diluting ownership between investors b. Money given to the start-up by investors, investment banks, and any other financial institutions, without diluting ownership between investors c. Receiving small amounts of capital from a large number of individuals to finance a start-up, without diluting ownership between investors d. An entrepreneur starts a company with little capital and builds the company with personal finances and a small amount of investments from angel investors e. A combination of financing a start-up by which an entrepreneur builds the company with personal finances, receives money from crowdfunding, and investments from financial institutions

A

1. Which of the following is NOT a main type of open innovation tool? a. Crowdfunding websites b. Startup alliance programs and licensing programs c. Incubators, accelerators, and open labs d. Academia alliance programs e. Programs for creating and entrepreneurial PR and mindset

A

1. Which of the following is NOT one of the types of crowdfunding? a. Fixed income-based b. Equity-based c. Lending-based d. Reward-based e. Donation-based

A

1. Which one best explains the waterfall process? a. The waterfall methodology is a more solidified process to a new startup that values process efficiency—meaning minimal bus, money, and time b. The goal is to launch the "perfect" product from the middle stages of the idea process c. This process is especially good because there is a time throughout the approach to see if the product is wrong because there is an interaction with the customer before launch d. There is no need to know the customer base to utilize this approach e. Both A and C

A

1. Which of the following is NOT a characteristic of the "innovation sweet spot"? a. Rapid product and market development b. New solutions c. Short product life cycles d. Raising of barriers to entry e. None of the above

D

1. What are the essential characteristics of venture capital firms? a. They are likely unprofessional organizations that specialize in financing innovative startups and manage the money of a third party b. They manage the money of a third party but are still risk averse (like traditional financing institutions) c. Start investing during the seed stage (the earliest stage) d. During their life cycle, they usually raise capital before choosing a fun investment strategy e. They are usually not risk averse and maintain a high risk/high reward profile

B

1. What is the difference between a start-up accelerator and incubator? a. Incubators advance the growth of existing companies with an idea and business model in place; accelerators support startups entering the beginning stages of building their company b. Incubators support startups entering the beginning stages of building their company; accelerators advance the growth of existing companies with an idea and business model in place c. Incubators operate on a set timeframe; accelerators operate on an open-ended timeline d. Incubators focus on building out the business as mentors and by providing capital; accelerators focus on the longevity of a startup and are less concerned with how quickly the company grows e. Incubators invest a specific amount of capital in startups in exchange for a predetermined percentage of equity; accelerators do not usually provide capital to startups and do not usually take an equity stake in the companies they support

B

1. What is the difference between the waterfall approach and the lean start up approach? a. The lean start up approach launches with a perfect product to the market; the waterfall approach launches new versions of a product to the market often b. The waterfall approach operates under the assumption of understanding the consumer, the market need, and the viable product that offers a solution to the need; the lean start up approach operates under the assumption of uncertainty in multiple needs and market aspects c. The lean start up approach has process efficiency with minimum bugs, money, and time; the waterfall approach has short and quick learning cycles and receives immediate feedback d. The waterfall approach launches with a perfect product to the market; the lean start up approach launches new products to the market after long and slow learning cycles e. None of the above

B

1. What is the homerun strategy? a. A strategy for venture capitalists to invest in very few startups during the first 3-4 years and incrementally increase their investments until they find very high potential startups and invest at least 70% of their money in the last 4 years b. A strategy for venture capitalists to invest at least 70% of their money in high potential startups during the first 4 years, while also closing at least 30% of the investments in the first 3-4 years c. A strategy for venture capitalists to reach significant profits of 8-10X their money d. A strategy for venture capitalists to return their investments by making 1-3X their money e. None of the above

B

1. What is the main reason for the high level of involvement of Business Angels? a. It's their own money, so they want to make sure it is all being spent on things relevant to the venture b. When they are former CEO's they bring resources (money, connections, experiences, etc.) with them when they invest, which allow and help them to be more involved c. They want to make sure that they stay involved, so that the company does not look for another Angel to invest that can provide more effort. d. The business angels want to show a high level of involvement so that other companies see, and those companies want this angel to invest in them as well e. If they are more involved, they will have to provide less money to the start-ups, since their work will be considered a form of payment

B

1. Which of the following are types of internal innovation and R&D sources? a. New product development, technological alliances, and licensing b. New product development, spinoffs, and corporate incubator intrapreneurship c. M&A, technological alliances, and corporate accelerators, d. Licensing, spinoffs, and corporate accelerators e. Corporate incubator intrapreneurship, M&A, and licensing

B

1. Which of the following describes a participating multiple preference liquidation? a. Primary shares receive based on their relative share in liquidation b. Primary shares receive their multiplied share and then primary and regular shares split the rest based on their relative share c. Primary shares receive their multiplied share and then primary stocks and regular shares split the rest based on their share until primary stocks reach a certain multiplier and then regular stocks get all the rest d. Primary stocks receive their share and then the regular shares receive the rest e. Primary shares receive all their investment and then the regular stocks and primary stocks share the rest of the money based on their relative share

B

1. Which of the following is NOT a challenge of crowdfunding? a. Due diligence and effective screening b. Raising small amount of capital from the masses c. Keeping the interest of investors in future rounds d. Coping with conflicts of interest between the platform and the investors e. Create processes and procedures of supervision and management

B

1. Which of the following is not a correct definition/example for the types of uncertainties that are associated with problems VC's may face when investing in a start-up? a. Business Model Uncertainty- A business model may appear to be good on paper, but VC's are uncertain that they will work. b. Need, Customers, and Market Uncertainty- The VC is certain there is a market for this product but doesn't know what the company needs to sell it or where to sell the product. c. Managerial Uncertainty- One of the first things a VC may consider is to replace a young and unexperienced manager. d. Technological Uncertainty- The functionality and/or usefulness of the innovative product is still unknown. e. Competition Uncertainty- There may be a company in the market that the VC/company does not know of, even after doing their due diligence.

B

2. How does the lean startup approach compare to the waterfall approach? a. The are very similar in their methodology in valuing process efficiency b. The lean process is an emergent process with testing, learning, and changing until one finds the product market fit in comparison to waterfall c. Both the waterfall and lean approaches have a version in the beginning which is a work in progress d. Both have long and arduous learning cycles or metrics e. None of the above illustrate a comparison between the two approaches

B

2. Which of the following is not true about sources of innovation in large corporations? a. As years pass, there is a higher percentage of new products of corporations coming from the outside. b. Today, corporations act defensively towards innovation and external sourcing, which shows in a sense that they are weak. c. Corporations are much stronger and able to handle open innovation today and are able to use these tools offensively. d. Large corporations rely more heavily on external sourcing today, and one of the reasons is the growth of the VC industry. e. The increase in multinational corporations relying on outside companies for products and technology led to a revolution of open innovation.

B

4. A company that hosts a hackathon in its geographical area for the public to enter and sends representatives to the event is most likely trying to do which of the following: a. Boost the morale of its employees by challenging them and showing them how capable they are. b. Create a more entrepreneurial and PR mindset by finding brains outside of the company. c. Gather information about the individuals who show up, so that if the company loses a valuable employee, they have a list of potential other candidates. d. Gather intelligent individuals together to test their product or idea at the event. e. Host an engaging event that shows the community why they should support their company, and search for potential donors.

B

4. In seed stages when investment is low and it's difficult to assess the firm value, what are the tools used for quick and simple investment? a. SAFE- simple acquisitions for future equity b. A small loan of $50-$150K in simple contact with no valuation definition with option for stocks in next funding round c. Staging and investment by Milestones d. Syndication e. Pre-emptive Right where shareholders can increase ownership percentage

B

4. In the event that a company decides to issue new shares of stock, which of the following exhibits the pre-emptive right of a shareholder if they currently own 5% of stock? a. If the number of shares doubles, so does the percent of stock owned. Therefore, the shareholder would now own 10%. b. If the number of shares doubles, the stockholder has the right to acquire additional shares to keep the same proportion of the total shares of a company. c. If the company issues new stock, the shareholder has the right to sell all of their stock prior to the issuance. d. If the company issues new shares of stock, the number of shares owned by a shareholder does not change - they have no right to the newly issued stock. e. In the event that the number of shares doubles, a shareholder has the right to own up to double the number of shares that they currently own.

B

Due Diligence is_____ a. A waste of time to investor because financials of a venture are meaningless, especially in early stages. b. Beneficial to the investor by giving them a more informed outlook on the company's financials. c. The process of meeting with a potential acquisition to discuss the logistics of acquiring them. d. Only conducted by venture capital firms onto potential companies and not vice versa. e. An unnecessary step to take if the venture capital firm is knowledgeable in the industry.

B

The reason why the distribution of venture capital returns look like this is because.... a. Venture capital firms' returns on investment are entirely random b. The success of venture capital firms comes from a combination of management and knowledge of the industry c. Most venture capital firms have small positive returns on investment while a small percentage fail year to year d. The success of venture capital firms comes from the macro-economic business cycle and government policies regarding investment on startups e. Venture capital firms' returns on investment are displayed in a homogenous distribution due to the equal level of talent in the industry

B

What is the difference between closed innovation and open innovation? a. Spinoffs are a commonality amongst closed innovation while rarely occur in open innovation b. Open innovation allows an external technology base for market understanding channels c. Open innovation is much more prevalent than closed innovation amongst top companies d. Closed innovation allows companies to channel partners and network much easier than if there was a system of open innovation e. Open innovation only has incubators and some accelerators while closed innovation only does mergers and acquisitions

B

When financing a start-up: a. Independent of the type of venture, one should first look towards their immediate circle (FFF), then try for a loan from a financial institution and then try other sources such as private investors. b. Based on the type of venture, one should either look at private financing and bootstrappin, or at incubators, accelerators, private investors, crowdfunding and governmental R&D grants. c. One should look at any source from which he can accomplish his/her goal. d. One should first look towards bank loans, then their immediate circle (FFF). e. All the answers above are wrong.

B

Why would a start-up not want to seek financial aid or a professional relationship with a CVC? a. The consulting and mentoring of a CVC is known to be below that of a private venture capital firm b. There may be a noticeable conflict of interest between the CVC and start-up that may inhibit growth for the start-up c. A start-up would not want the reputational name of a top CVC to overshadow their own name and thus take away future profits d. There will usually be lower values of future rounds once worked with a CVC e. All of the above

B

1. What do venture capital firms NOT look for in a company? a. A strong team of entrepreneurs with a wide range of experience and a network who each bring different visions, abilities, and capabilities to the team b. A unique business idea that has both a large market opportunity that is growing and profitable and has evidence of solving a real need according to market analysis and customer trials c. A unique business idea that is the first on the market, has a patent, and has evidence of solving a real need according to market analysis and customer trials d. All of the above e. None of the above

C

1. What happens during the mezzanine phase of a start-up? a. Building the product, deploying product with early customers, and demonstrating product/market fit with continued growth b. An initial public offering has been made and the product is on the public market with continued growth c. Funds for plant expansion, marketing expenditures, working capital, and product/service improvements until ready for sale/public offering d. Investors provide capital and get equity in return with continued growth of product e. Private equity firms and investment banks get involved and start-up gets acquired by bigger company

C

1. What is the main difference between the Adverse Selection problem and the Moral Hazard problem? a. The Adverse Selection problem occurs after the VC and the start-up sign the agreement and the Moral Hazard problem occurs before the VC and start-up sign the agreement b. The Adverse Selection problem occurs when the principle does not have complete information on knowledge and activities of the agent and the Moral Hazard problem occurs when the VC and the start-up interests do not match c. The Adverse Selection problem occurs prior to the VC and the start-up sign the agreement and the Moral Hazard problem occurs after the VC and the start-up sign the agreement d. The Adverse Selection problem occurs because the principle does not full transparency of the agents acts, data, and decision process and the Moral Hazard problem occurs because the seller has more knowledge on the asset than the buyer e. The Adverse Selection problem is when there are no perfect contracts or full control and the Moral Hazard problem is when there are complex contracts and intensive due diligence

C

1. Which of the following describes the third wave of open innovation? a. Using external sources for innovation b. Using multiple tools to gain external sources for innovation c. Changing the corporate mindset and full coordination d. All of the above e. None of the above

C

1. Which of the following is NOT a characteristic of accelerator programs? a. An extensive network of 15-50 mentors with about 30-300 hours of teaching from courses b. Small capital investment with up to an 8% equity charge and an equity fee up to $1000 c. Long cohorts of about 2 years with about 100 startups working together to test assumptions d. A venture phase starting from team and initial idea working towards a first product and seed investment and beyond e. Lean management with only 1-2 employees and many volunteers

C

1. Which of the following is NOT a reason as to why startups fail? a. Identifying a target market that is not narrowed down enough to find the early adopters b. Having the wrong go to market strategy and marketing channels to reach the identified target market c. Technological and operational failures due to a lack of incident reporting systems d. Creating a product that does not solve a large enough market problem or a consumer pain point in a scalable way e. Identifying a real market need, but creating a product that is the wrong solution and does not accurately match the consumer needs

C

1. Which of the following is NOT one of the importances of private investors? a. Seed investments b. Knowledge and involvement c. Investments in projects that are IPOable d. Investments in projects that are not IPOable e. Fixing expanding early stage market failure

C

3. How does the validation stage differ from the other stages of the Lean Startup Process? a. In this stage a company verifies that the product will work best with regards to the needs of the customer. b. This is the stage that the most amount of money is put into a product once the company verifies it will be successful. c. A product is tested to see if the assumptions that are made about the product usefulness by the customer are proven to be true. d. During this stage a company verifies the marketing routine and the road map. e. Surveys and sample products are given out to ensure there is interest in the product, and there is theoretical verification.

C

Accelerators are.... a. When an established company raises money from venture capitalists b. Beneficial to startups because of the tremendous amount of capital invested toward it c. Intended to help startups get off the ground for about 5% equity in return d. Easy exit opportunities for growing startups that have poor financial structures e. Investors looking to gain maximum return on investment with the least amount of risk

C

In the last few decades the number of start up companies has increased. This is the result of: a. The current economic situation promotes new company growth. b. New ideas that emerged now due to technological development. c. Big corporations have stopped performing the same amount of R&D internally and are willing to purchase from other companies. d. The low risk involved in creating a new company. e. It is just a phase of the current times.

C

Since it shows such an extreme distribution, we can determine if a VC is successful: a. From nothing. It is pure luck. b. From the passing trends of the world economy. c. From the consistency of the VC's performance in the past. d. From the amount of money, he has invested in the past. e. From what sector of the market he originated from.

C

The 20-60-20 rule..... a. Means that 20% of venture capital firms fail after a year, 60% fail after five years and 20% fail after ten years. b. Is a way to measure the chances that a specific venture capital firm will make more money than they lose in a given time period. c. Means that 20% of venture capital backed startups fail, 60% break even and 20% show high yields. d. Means that 20% of the venture capital backed startups break even, 60% fail and 20% show high yields. e. Is a way to measure the risk associated with a specific startup and their chances for success.

C

The equity structure for startups... a. Only matters when the business reaches an IPO and shares are distributed publicly b. Gets increasingly important for potential venture capital investors as the venture matures c. Become diluted as the venture matures and founders give away equity d. Do not change very much after the seed stage e. Is most concentrated when a company is about to go public

C

1. What is the difference between a lifestyle company and a high growth company? a. A lifestyle company provides financial source for individual and family and has significant growth and revenue potential; a high growth company usually has annual income up to 2 million and requires significant external financing b. A lifestyle company requires non-significant capital and medium risk; high growth companies provides financial source for personal purposes and makes up less than 5% of businesses c. A lifestyle company provides financial source for personal purposes and makes up less than 5% of businesses; high growth companies have significant revenue and growth potential and require significant external financing d. A lifestyle company provides financial source for personal purposes and usually has annual income up to 2 million; high growth companies make up less than 5% of businesses and require significant external financing e. A lifestyle company makes up less than 5% of businesses and requires significant external financing; high growth companies provide financial sources for personal purposes and requires non-significant capital

D

1. What kind of value can venture capitalists add to a company? a. Venture capitalists can expand the company's networking and open doors to assist in business development b. Venture capitalists add value to dying companies by investing money, taking control, and eventually becoming part of top management of the company c. Venture capitalists sit as board members and assist in raising future money d. A & C e. All of the above

D

1. Which of the following are/is parameters that must be defined for loans as an investment tool? a. The interest on the loan in convertible notes b. Percent of discount in conversion to stocks in the next round c. Max value in conversion (Cap) - conversion as the lower value of the Cap and round valuation + discount d. All of the above e. None of the above

D

1. Which of the following descriptions about private investors and venture capitals is true? a. Private investors have low variety of market and venture capitals have high variety of market b. Private investors invest in the early-late stages and venture capitals invest in the pre-seed to early stages c. Private investors do intensive due diligence and venture capital do minimal due diligence d. Private investors process takes 1-2 months and venture capitals process takes 3-9 months e. Private investors source of deals is business networks and venture capitals source of deals is social networks

D

1. Which of the following examples is NOT a Moral Hazard problem? a. The entrepreneur will not devote enough efforts so the value of the venture will decrease b. The entrepreneur will spread the risk in the venture so the investor wants to spread the risk in the portfolio c. The entrepreneur will use his power to change the terms of the contract which will damage the share and conditions of the investor d. The entrepreneur will present misrepresentation about the startup which will lead to investment in a higher valuation e. The entrepreneur will take exceeded salary bonuses so the value of the venture will decrease

D

1. Which of the following is not a characteristic of the R&D stage of the "S Curve"? a. Typically involves organizations such as academia, large companies, and research labs. b. It is the first stage, and also called the fluid stage. c. This stage can be very long; it is where most of the basic things are done. d. All of the above are characteristics. e. None of the above define this stage.

D

2. What are some of the critical functions of private investors in financing startups? a. They are only involved when it comes to financial roles and not in terms of decision making b. They are involved in late stages of decision making c. They are involved in investments that are IPOable d. They are diverse investors that are involved in fixing/expanding early stage market failure e. Their primary focus is to review reports and documents

D

2. Which of the following illustrate the 3rd wave of open innovation? a. Using external sources for innovation b. Using multiple tools to gain external sources for innovation c. Changing the corporate mindset and full coordination d. Using inbound and outbound tools e. None of the above

D

2. Which of the following is not an importance of private investors? a. They invest in pre-seed and seed stages that a VC wouldn't even look to invest in (fix a gap in funding) b. VC look for IPO-able projects only, which is not true of angels c. Knowledge of the industry and involvement in the company d. They provide complete financial support and then allow and trust the company to do business and profit for both parties. e. They help to fix and expand the company in the earlier stages to avoid market failure

D

3. In the seed stage, when investment is low and a simple agreement for future equity (SAFE) is constructed, which of the following is not a parameter that must be defined in the loan? a. The maximum value in conversion (Cap) of the lower value of the Cap and round evaluation plus the discount. b. The interest on the loan must be presented in the Convertible notes. c. The percent discount in conversion to stocks in the next round (0-30%). d. Price per share at the time of the initial investment. e. None of the above - each of these must be defined.

D

3. Which of the following is not a difference between Angels and VCs a. Private investors invest privately while venture capital firms invest third party money b. Due diligence for private investors is minimal while intensive for venture capital firms c. Private investors make deals mainly through social networks while venture capital firms make deals through business networks d. Private investors invest in early-late stages while venture capital firms invest in pre-seed to early stages e. Private investors decide to invest based on rationale, chemistry, and gut feelings while venture capital firms decide based on rationale and trends

D

4. Which of the following is NOT an added value by venture capital firms? a. VCs expand the company's networking and open doors and assist in business development b. VCs sit as board members and provide business advice and supervise and review the firms c. The "reputation effect" in which VCs are the 3rd party certification needed to identify firms as legitimate d. VCs take over the firm leadership when economic conditions call for it e. All answers are an added value

D

The J Curve.... a. Will show which venture capital firms have a bad portfolio during the first 2 years and which ones have a good portfolio. b. Is the reason why some venture capital firms fail and some succeed. c. Is the most important graph to look at when evaluating a venture capital firm's success. d. Is in that specific shape because it takes more time for good companies to succeed than for bad ones to fail. e. Is in that specific shape because the failing companies will show negative returns in a different way from succeeding companies during the first couple of years.

D

The Yozma Program.... a. Succeeded in attracting Israeli investors, but failed to bring in foreign investors b. Was a way to incentivize the investors to take on a small risk and reap half of the returns on investment c. Failed after a couple of years because the government ran out of money to continue funding the program d. Provided tax incentives to foreign venture capital investments and matching any investment toward an Israeli venture e. Stopped as a result of the financial crisis in 2007

D

Venture capital is seen from the entrepreneur as... a. Harmful because of the assistance in future capital raising for the venture. b. A way to grow their company with less risk because of they fail, the entrepreneur won't lose anything. c. Beneficial because of how much of the company's responsibilities and equity the VC now takes on. d. Exploitative because the VC may want to push for fast growth and liquidation that isn't in the interest of the entrepreneur. e. Wonderful because of the unlimited funds the entrepreneur can now use at the cost of the VC.

D

When comparing creation and closure plots looking past a certain year, we can a observe either a very small number of startup closure or zero closures. Which sentence below best explains this: a. During that period of time there was no need for ventures to close due to the lack of competition. b. The economic situation at the time meant that those companies did require them to close. c. The companies created at the time were so successful they still operate today. d. Due to the less competitive nature of those times those companies did not close until later years where the closure numbers increased. e. None of the above describe the situation correctly.

D

1. How should fundamental uncertainty be managed in startups? a. By added value channels such as replacing managers b. Diversification of investments c. Knowing the startup better and mitigating risk of startup d. Creating a distinction between the firm owners and firm managers e. Both A and C are correct

E

1. In what way was the Waterfall Approach most successful? a. It was used for the longest amount of time because no other method worked better for improving efficiency. b. It had multiple steps, which meant the companies were able to look at the products very carefully before selling it on the market. c. The process was successful for any type of company and ultimately lowered the number of failures. d. It helped companies to be more realistic in the end product, and launch a perfect product from day 1. e. It helped companies become more efficient by minimizing waste.

E

1. What is the primary goal of a corporate incubator? a. To commercialize the academic institution and contribute to the development of local industries b. To make profits from rental fees and capital gains from investment c. To enhance the entrepreneurial eco-system through rental fees and create a source for external innovation d. To track market trends and generate quality deal flow with small investments and create a source for external innovation e. To assist in projects outside of the core business and to attract technologies and innovations outside of the business

E

1. Which of the following below describe key characteristics of private investors or business angels? a. Invest in Round A stages with little to no level of involvement b. Wealthy individuals or families that invest their private money c. Former entrepreneurs and CxOs with business experience in the industry who invest for personal and financial causes d. Their primary purpose is to sit on the board of directors e. Only B & C are correct f. All of the above are key characteristics of private investors or business angels

E

1. Which of the following is NOT a cost of venture capitalist investment to the entrepreneur? a. Venture capitalist push for fast growth and liquidation even if it is not always in the interest of the entrepreneur b. Venture capitalists can prefer to shut down the firm in cases of partial success or too slow of a pace c. Venture capitalists hold a significant ownership share, various control rights and veto rights, which can often result in loss of control d. Venture capitalists require an expensive amount of money while also adding risk sharing e. Venture capitalists can kick a founder out of the company and seek to own the entirety of the company to become a member of top management

E

1. Why is it risky for startups to finance their ventures with help from traditional financing institutions? a. Banks do not like risk and prefer for new businesses to return guaranteed profit and have too many rules and regulations that a new startup would have trouble cooperating with b. Loans aren't the right tool for high risk and don't prove as useful as equity like real estate c. Banks have certain policies that do not allow for startups with less than 10 employees to receive funding d. It is not risky for startups to finance their ventures using financial institutions because financial institutions have value added e. Answers 1 and 2 are correct

E

2. Which of the following acts will most-likely NOT lead to a decrease in the value of the venture? a. The entrepreneur has not taken a large salary in prior years due to lack of funds, therefore they decide to slightly increase their salary post-investment. b. After receiving an investment in their company, an entrepreneur will not dedicate enough time into maximize the potential benefits of the new capital. c. Following an investment from a VC, an entrepreneur sees a chance to maximize his or her own personal utility, rather than maximizing startup valuation. d. A VC does is not fully transparent with the company in relation to their potential added value, and they do not share information that will affect the future success of the company. e. After hearing about a former scandal within the company, the VC ensures there are stricter standards to be met within the contract, so that no such events occur again. f. A manager chooses to take a large risk by adding a new feature to a product right before its launch, since they now have the finances to support any potential negative outcomes. g. D and E are correct

E

3. Which of the following demonstrates a Homerun strategy? a. A strategy to identify losers fast and close on them, where 1/3 should be closed down after 3-4 years b. A strategy where VCs take their time on closing down startups usually between 7-12 years c. Investments and closures usually depend on the economic conditions at the time rather than follow rules based on a timeline d. A strategy to identify losers fast and close on them, where 70% of the money should be invested during the first 4 years e. A & D are correct

E

3. Which of the following include the appropriate alternatives for financing startups? a. Private financing with the help of friends and family or bootstrapping b. Traditional banks and loans are best suited for startups c. Technological incubators and accelerators are most appropriate only once the startup has reached a break even point d. Private investors/angels and venture capital firms e. Answer 1,4, and crowdfunding are all good alternatives f. Only answers 1 and 4 are correct

E

4. What are the different types of incubators? a. Private in which business is sustained through fees, government incubators which are similar to private incubators, and banking incubators in which only banks provide investment b. Private and government explained above however there are also acceleration incubators that are a mix between an accelerator and an incubator c. Academic institutions' incubators are the only true form of an incubator. These are a way for professors to do research d. There could be a dozens of "types" of incubators and there is no real way to differentiate between the types e. Private incubators, which are sustained through rental fees and add to capital gains, government incubators (which operate similarly to private), Academic, and Investor incubators f. None of the above explain the different types of incubators.

E

4. What are typical characteristics of a startup? a. Startups are usually based on a unique idea that have intangible assets and don't have many years of losses b. Startups typically do have long years of losses (known as the valley of death) and are highly uncertain c. Startups are only vulnerable within the first few months and then usually show certainty relatively quickly d. Startups are born global e. Answers 2 and 4 are correct

E

Open Innovation can be described as the follows.... a. A way for a company to exploit startups ideas and take them as their own b. A development in a company that uses internal resources to formulate new ideas c. A way a company improves operations and growth by using both external and internal resources d. A resource such as an incubator or accelerator that a company can use to attract innovative ideas to grow and "keep with the times" e. C and D

E

The point of corporate venture capital is to... a. exploit the independent revenue and profit in the new venture itself b. do as well, if not better than private venture capital firms that invest in a startup c. learn about the innovation coming out of the acquired or funded venture and leverage it d. use the money of the corporation and invest it in the future rather than current capital e. all of the above

E

1. Which of the following below best describe the trends that underpin the open innovation revolution? a. Technological changes that narrowed economies of scale in R&D and increased diversity b. Academia moving toward generic and applied R&D c. Significant decrease in employee turnover d. Industry value chains and business models that are unchanging e. All of the above f. Only A & B are correct

F

2. Which of the following examples demonstrate adverse selection? a. An entrepreneur will not devote high efforts to the venture b. The entrepreneur will act to maximize personal utility rather than maximizing startup valuation c. The entrepreneur will take exceeded salary/bonuses d. The investor will present misinterpretation of his added value e. The entrepreneur will present misinterpretation about the startup f. Only D & E are correct

F

2. Which of the following is a key element to the Lean Start-up Approach? a. The process focuses on testing assumptions. b. Failure happens sooner, so companies waste less money and time, which saves value for VC's who are able to invest in more companies. c. Companies are able to stick with the same business plan throughout the entire process. d. There are multiple phases, similar to the Waterfall Approach, and companies jump from one phase to the next (it's all uphill). e. The lean start-up approach is only successful for mature start-ups. f. Both A and B g. Bot B and C

F

2. Which of the following is/are NOT true regarding a Limited Partnership VC? a. They are firms with a limited life time that are only established for a period of 7-12 years b. Most of the investment is done only during the first 2 years c. Exits are done only after 8 years d. Investments are usually in the form of common stock e. There is an expected high yield of over 20% annually f. Both B & D

F

2. Which startup investment phase has a beta version of the product, first sales, and financed by venture capital firms or crowdfunding? a. Pre-Seed, but with the help of incubators b. Mid/Expansion stage, but they also reached the break even milestone c. Post PSF stage stage with $1.5M-$5M in funding d. Early stage e. Seed stage depending on experience and founders f. Both answers 3 and 4 are correct

F

3. Which of the following accurately describes differences between PI and VCs? a. Private investors invest in later stages, while VC's make sure to invest in earlier stages to avoid early market failure. b. Both private investors and VC's do intensive due diligence prior to investing in a start-up. c. VC's prefer to invest in local companies so they can be more involved and better oversee the actions of the company d. Private investors require no contract, while a venture capital requires a complex contract. e. A private investor is more likely to invest in the future, since they tend to be more involved on a personal level. f. None of the above. g. All of the above.

F

3. Which of the following reasons demonstrate why startups fail? a. They usually identify a false need, wrong solution, or wrong target market b. The usually don't have the correct revenue models c. Technological or operational reasons d. They usually identify the correct target market but at the same time do not identify the correct marketing model e. All of these demonstrate why startups fail f. Both A and B are correct

F

3. Which of the following trends have we seen in the last decade with regards to open innovation? a. The most successful companies are those that are able to use outbound innovation and perform a deep search on information. b. Although there has been a significant increase in OI, the tools utilized have remained relatively the same over the past decade. c. Even though evidence proves that companies that balance inbound and outbound innovation are most successful, most companies use mostly inbound. d. Smaller companies, even low and mid-tech companies, using external sources. e. Both B and C f. Both C and D

F

4. In terms of contracts and defense mechanisms how do private investors and venture capital firms differ? a. Venture capital firms create simple contracts b. Both VC firms and private investors prefer entrepreneur investment, convertible bonds, and intense involvement in terms of defense mechanisms c. For VC firms they prefer veto rights and sales restrictions but prefer common shares d. Private investors have simple contracts while VC firms create complex and detailed contracts e. Only private investors use entrepreneur investment, convertible bonds, and intense involvement for defense mechanisms f. Only D & E are correct

F

4. What are the two main goals of a corporate incubator? a. If an idea emerges that is not in the core of the business, the idea is able to continue to grow and become successful. b. To improve the performance of incubators and increase the number or projects and amount of money raised. c. Corporate incubators help to match corporations with entrepreneurs for funding and networking. d. It enables corporations to attract some sort of innovation outside of the company such as a partnership or acquisition. e. A and B f. A and D g. B and D

F

4. Which of the following does not correctly define the type of crowdfunding it is associated with? a. Reward-based is when you give money to a project and expect anything in return. Typically, backers prefer to get a tangible reward. This type accounts for more than 70% of the crowdfunding market. b. Lending-based is when loans are provided through online platforms; most similar to a Kickstarter. c. Equity-based funding is when money is provided through a platform and in return you receive shares of the start-up. This type of funding is illegal in America today. d. Donation-based is the most philanthropic; you do it for the feeling, not the return, although when there is a return the investors tend to give more. e. All of the above correctly define each type of crowdfunding. f. None of the above correctly define each type of crowdfunding.

F

4. Which of the following is not an open innovation tool? a. M&A and Corporate VC b. Startup alliances programs and licensing programs c. Incubators, accelerators, and open labs d. Academic alliances e. Programs for creating an entrepreneurial PR and mindset f. All of the above are open innovation tools

F