Chapter 8

Which of the following statements is not true of venture capitalists?

They are interested in trying to manage firms themselves.

Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.

True;

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

True;

An informal risk capitalist is referred to as:

a business angel.

Which of the following does not represent a category of angel investors?

amateur angels

Which of the following includes information about the proposal size, financial projections, investment recovery, competitive advantage, and company management?

business plan

The most common source of debt financing is

commercial banks.

Major trends in the venture capital field today include all of the following except

less specialized and more homogenous funds

One of the advantages of public offerings is

liquidity.

The main objective of Regulation D is to

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

Which of the following is not a type of debt financing?

private placement

Which of the following is a danger not associated with peer-to-peer (P2P) lending?

privatization of business plans

A disadvantage of debt financing is

regular interest payments.

Advantages of debt financing include all of the following except:

regular interest payments.

The entrepreneur should ask the venture capitalist _____ questions.

an unlimited number of

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

False;

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

False;

Venture capitalists, surprisingly, require little information before they make an investment.

False;

Informal risk capitalists are often referred to as "business angels."

True;

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.

True;

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

True;

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

True;

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

True;

Which is an important question for the entrepreneur to ask when evaluating the venture capitalist?

Is the person someone with whom the entrepreneur can work?

Crowdfunding campaigns provide entrepreneurs with a number of benefits including which of the following?

all of the above