Introduction to Entrepreneurship

Which is an important question for the entrepreneur to ask when evaluating the venture capitalist? a. Is the person someone with whom the entrepreneur can work? b. Is the person a close relative? c. Is the person wealthy? d. Is the person a college graduate?

a. Is the person someone with whom the entrepreneur can work?

Crowdfunding is a growing practice for entrepreneurs to seek funding for their ventures by raising monetary contributions from a large number of people via the Internet. a. True b. False

a. True

Informal risk capitalists are often referred to as "business angels." a. True b. False

a. True

Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies. a. True b. False

a. True

Which of the following is not a type of debt financing? a. private placement b. trade credits c. finance companies d. accounts receivables

a. private placement

A disadvantage of debt financing is a. regular interest payments. b. possible cash flow enhancement. c. inhibition of growth and development due to equity investments. d. relinquishment of ownership.

a. regular interest payments.

Advantages of debt financing include all of the following except: a. low interest rates that justify the opportunity cost. b. regular interest payments. c. potential greater return on equity. d. no relinquishment of ownership.

b. regular interest payments.

The main objective of Regulation D is to a. increase investment in private placement. b. regulate new small-business investment. c. make it easier and less expensive for small ventures to sell stock. d. reduce debt financing by small enterprises.

c. make it easier and less expensive for small ventures to sell stock.

The most common source of debt financing is a. trade credit. b. factoring. c. commercial banks. d. finance companies.

c. commercial banks.

One of the advantages of public offerings is a. liquidity. b. disclosure. c. requirements. d. cost.

a. liquidity.

Major trends in the venture capital field today include all of the following except a. less specialized and more homogenous funds b. emerging feeder funds c. decrease in start-up investment amounts d. global reach

a. less specialized and more homogenous funds

Which of the following includes information about the proposal size, financial projections, investment recovery, competitive advantage, and company management? a. business plan b. evaluation process c. VC evaluation perspective d. VC reference sheet

a. business plan

Equity financing is money invested in the venture with no legal obligations to repay the principal amount of interest or interest rate on it. a. True b. False

a. True

Private placement is a method of raising capital through the private placement of securities. a. True b. False

a. True

Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early- and late-stage ventures. a. True b. False

a. True

The entrepreneur should ask the venture capitalist _____ questions. a. at most ten b. exactly twenty c. an unlimited number of d. no

c. an unlimited number of

Which of the following is a danger not associated with peer-to-peer (P2P) lending? a. privatization of business plans b. funding success rate c. potential tax liability d. uncertain regulatory environment

. privatization of business plans

Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public. a. True b. False

b. False

Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals. a. True b. False

b. False

Venture capitalists, surprisingly, require little information before they make an investment. a. True b. False

b. False

An informal risk capitalist is referred to as: a. your neighbor. b. a business angel. c. a retiree. d. someone with extra money to invest but who is not interested becoming an entrepreneur.

b. a business angel.

Which of the following does not represent a category of angel investors? a. micromanagement angels b. entrepreneurial angels c. amateur angels d. corporate angels

c. amateur angels

Crowdfunding campaigns provide entrepreneurs with a number of benefits including which of the following? a. funding b. engagement c. profile d. all of the above

d. all of the above

Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of the money. a. True b. False

a. True

Which of the following statements is not true of venture capitalists? a. They want the entrepreneur and the management to run the company. b. They expect high return on investments. c. They are interested in trying to manage firms themselves. d. They take a long time to raise venture capital.

c. They are interested in trying to manage firms themselves.