New venture formation finals

What is the best way to get a meeting with a professional investor to make your pitch? a. Persistent phone calls b. Persistent emails c. Make an appointment in person d. Get a trusted referral

Get a trusted referral

Advisory board members usually obtain what percentage of stock in a venture? a. .1-.2% b. 5% c. 1-2% d. 1.5%

a. .1-.2%

What are two essential types of teams in new venture startups? a. A team that writes the business plan and a team that builds the venture b. A team that writes the business plan and a team who divests the venture c. A team that builds the venture and one that talks about it d. A team that builds the venture and a team that manages it

a. A team that writes the business plan and a team that builds the venture

What is a key difference between a venture's Advisory Board and its Board of Directors? a. An advisory Board has no legal liability b. The Board of Directors does not get paid c. The Advisory Board expects nothing in return d. The Board of Directors is comprised of reference customers

a. An advisory Board has no legal liability

Institutional investors will prefer a ______________________ because it provides the different classes of stock needed to create the preferred shares that VC's want in order to have preferential rights and preferences over other equity holders. a. C Corporation b. S Corporation c. Limited Liability Company (LLC) d. Sole Proprietorship

a. C Corporation

What class of stock do S corporations and LLCs have? a. Common b. Preferred c. Diluted d. Inflated

a. Common

When looking at financials for your venture investors are also looking for a(an): a. Exit Potential b. Executive Summary c. Organization Structure d. Marketing Strategy

a. Exit Potential

The _________ section of your plan includes a segmentation grid, customer use cases, and customer needs a. Market b. Solution c. Go-to-Market d. Operations

a. Market

What is the downside of the C Corporation? a. Double taxation for the founders only b. Triple taxation for everyone involved in the C Corporation c. Double taxation for shareholders d. Only taxation at a corporate level

c. Double taxation for shareholders

In terms of describing the major milestones and the funding of such, what should your presentation slide(s) on this topic include? a. Milestones to achieve alpha, beta, first dollar sale and first operating profit b. Milestones to achieve alpha, beta c. Milestones to achieve first dollar sale and first operating profit d. Milestones to achieve first launch only

a. Milestones to achieve alpha, beta, first dollar sale and first operating profit

What is the best answer to a potential investor question about who you will be working with on the venture's IP? a. Name a good attorney at a reputable law firm b. Name someone on your Board of Directors c. Say you will look into it d. Say you haven't thought of that yet

a. Name a good attorney at a reputable law firm

What is a distinctive factor of an S Corporation? a. Profits and losses are distributed to stockholders and taxed as personal income b. Dividends are cut quarterly c. Founders must convert all of their shares as options d. Everybody in the venture automatically gets stock

a. Profits and losses are distributed to stockholders and taxed as personal income

When making your investor pitch, what is the important and often "magic word" referring to the nature of revenue for the business? a. Recurring b. Operating c. High d. Target

a. Recurring

What is a recent trend with Customer Advisory Boards? a. Running board meetings online b. Running board meeting via conference call c. Eliminating such boards d. None of the above

a. Running board meetings online

According to the text, which 3 skill sets are needed on a founding team? a. Sales & Marketing, R&D, Running a business or operation b. Sales & Marketing, Finance, Running a business or operation c. R&D, Running a business or operation, Finance d. R&D, Finance, Running a business or operation

a. Sales & Marketing, R&D, Running a business or operation

The role of the Board of Directors of a new venture is to primarily protect the interests of ________________. a. Shareholders b. Customers c. Investors d. Founders

a. Shareholders

When angels, VCs, and corporate investors look at your addressable market, what do they want to see that it is? a. Substantial b. Defined c. Growing by 20 percent per annum d. None of the above

a. Substantial

What is a major development milestone that involves a prototype of a product, system or service called? a. The alpha version b. The beta version c. The first commercial release d. None of the above

a. The alpha version

The title page of a venture's written business plan should include what? a. The name of the business and contact information b. Industry insight c. Niche market d. Agenda

a. The name of the business and contact information

The _________ includes the type, frequency, and price-level relative to competition. a. The revenue model b. The customer model c. The income model The exit model

a. The revenue model

What is the recommended format for an investor presentation? a. The team, the customer, the opportunity, the solution, competitive positioning, business model, financial projections, go-to-market strategy, milestones b. Customer, opportunity, solution, business model, financials, go-to-market strategy c. Opportunity, business model, financials, milestones d. None of the above

a. The team, the customer, the opportunity, the solution, competitive positioning, business model, financial projections, go-to-market strategy, milestones

When the investors ask for how much money you want, what is the appropriate response? a. Walk through the specific steps within your key milestones, hard and clear b. Simply repeat the overall amount requested c. Tel him/her you will have to get back to them d. Always ask for more than what you need

a. Walk through the specific steps within your key milestones, hard and clear

What is a disadvantage to sole proprietorship? a. Your personal assets are exposed to liability claims b. Your income is taxed twice c. You must issue dividends d. None of the above

a. Your personal assets are exposed to liability claims

What is the optimal number of slides to use in your presentation to potential investors? a. 5 b. 10 c. 15 d. 20

b. 10

How long should the optimal investor presentation last? a. 5 minutes b. 20 minutes c. 30 minutes d. 1 hour

b. 20 minutes

What is typical number of people on a venture's Board of Directors? a. 7 b. 5 c. 9 d. 12

b. 5

With regard to a written business plan, what are potential investors are ideally looking for? a. A 5 page business plan b. A 20-25 page business plan c. A PowerPoint presentation only d. A 100-page business plan

b. A 20-25 page business plan

With a partnership, profit and losses are reported on? a. A 1040E schedule b. A Schedule K-1 c. An S-schedule d. Profit and losses are not reported

b. A Schedule K-1

In the financial projections of the business plan, what does an investor want to see? a. Hard five year numbers b. A granular, bottoms-up projection of revenues c. A one year P&L statement d. A two year cash flow statement

b. A granular, bottoms-up projection of revenues

What is the typical development plan of a technology intensive firm? a. Sigma, Beta, Launch b. Alpha, Beta, Launch* c. Beta, Alpha, Launch d. Alpha Sigma, Launch

b. Alpha, Beta, Launch

What is your goal as venture founder? a. Hire B team members and make them A players b. Create a high-performance culture driven by a team of A players c. Make all major decisions by yourself d. None of the above is a goal for a venture founder

b. Create a high-performance culture driven by a team of A players

Your channels, pricing, promotion, sales, and branding strategies should be included in what section of your business plan? a. Business model b. Market analysis c. Go-to-market d. Organization

c. Go-to-market

As a venture founder, which of the following is one thing you must do? a. Always allow others to make venture decisions b. Do not promise stock to anyone other than a rock-solid core venture team member c. Always promise stock to anyone who helps you with your venture d. Hire the cheapest team members

b. Do not promise stock to anyone other than a rock-solid core venture team member

The most important section of your plan when trying to get an investor to review it is the: a. Business Model b. Executive Summary c. Exit Strategy d. Business Model

b. Executive Summary

What is the close in an investor pitch? a. Asking for the funding b. Getting a commitment to a rapid due diligence process c. Business valuation d. The exit

b. Getting a commitment to a rapid due diligence process

What is the golden rule to remember when it comes to pitching a business plan to an investor? a. The venture founder is in control. b. He or she who has the money rules! c. He or she who has the venture idea rules! d. None of the above

b. He or she who has the money rules!

What is the key when presenting your financial projections to your potential investors? a. Providing very detailed financials b. Providing a very high level P&L for five years c. Providing a base level P&L for twelve months d. Providing complex quarterly numbers

b. Providing a very high level P&L for five years

When telling the story of your business to potential investors on what should you focus? a. Presenting very detailed financials b. Providing the impression of a clean, powerful business model c. Why your team can exploit the opportunity d. Your secret sauce

b. Providing the impression of a clean, powerful business model

If a potential investor asks you about the sales cycle for the business what should you do? a. Provide some general responses b. Specify the number of days in the sales cycle c. Immediately respond that it all depends d. None of the above

b. Specify the number of days in the sales cycle

Which of the following is a story you don't need to tell in an investor pitch? a. The Story of you and your team b. The Story of the product development c. The Story of the target customer d. The Story of your business

b. The Story of the product development

What is the price of taking outside money for your venture? a. 2X the value of your venture b. The possibility of being removed as founder by your board of directors c. Paying back investors at above market interest rates d. None of the above

b. The possibility of being removed as founder by your board of directors

What should the first few sentences of the executive summary of the business plan show? a. Your five year financial projections b. The vision of what you wish to create and the market position you wish to achieve c. The ideal investment amount being requested d. The venture's go-to-market strategy

b. The vision of what you wish to create and the market position you wish to achieve

In terms of your presentation to investors, with regard to competitive positioning of your venture, what do investors want to see? a. A lot of competition on a perceptual map b. Your solution occupies some sort of "white space" on a perceptual map relative to competitors c. That your solution is aligned exactly with your biggest competitor on the perceptual map d. A quadrant on a perceptual map which illustrates how much money customers will spend on your product

b. Your solution occupies some sort of "white space" on a perceptual map relative to competitors

When it comes to presentation style during an investment pitch it is important to _______________. a. carefully read through your slides with your investor b. not read your slides and instead speak to your audience c. always stay at your lectern or podium d. always talk at the investor audience

b. not read your slides and instead speak to your audience

Outside members on the Board of Directors for a venture typically receive what percentage of stock in a venture? a. .1-.2% b. 3-4% c. 1-2% d. None of the above

c. 1-2%

What is the 10/20/30 rule of PowerPoint presentations that should be remembered when making an investor pitch? a. 10 slides, 20 point font, 30 minute presentation b. 10 point font, 20 slides, 30 minute presentation c. 10 slides, 20 minute presentation, 30 point font d. None of the above

c. 10 slides, 20 minute presentation, 30 point font

What is a growing trend with new ventures? a. Adding an Advisory Board b. Adding a Board of Directors c. Adding a Customer Advisory Board d. None of the above

c. Adding a Customer Advisory Board

Venture capitalists tend to insist on which form of incorporation for a venture because it offers multiple classes of stock? a. LLC b. S Corporation c. C Corporation d. None of the above

c. C Corporation

For the story of the target customer, what is the recommended focus of your presentation? a. Describing the customers' demographics b. Discussing where the customers are c. Creating tension around, and the solving, the problems faced by the customer d. Dimensionalizing only the opportunity

c. Creating tension around, and the solving, the problems faced by the customer

What is one thing you should always remember about the solutions section of your business plan? a. Investors don't care about the time needed to get the first product or service to the market b. Investors do not need you to describe your product/service portfolio; they can figure it out c. Investors do not like to invest in onesies, e.g. a single product or service d. Investors always like to invest in onesies

c. Investors do not like to invest in onesies, e.g. a single product or service

The target market, customer profile, and competitive analysis would be included in what section of the business plan? a. Business model b. Solutions c. Market analysis d. Go-to-market

c. Market analysis

What is the standard format observed in most funded business plans? a. Having only annual revenues and expenses for five years b. Having a decent balance sheet c. Monthly breakdowns of revenues and expenses for the first two years of operations and then annual projections for Years 3, 4 and 5 d. None of the above

c. Monthly breakdowns of revenues and expenses for the first two years of operations and then annual projections for Years 3, 4 and 5

What is a classic mistake made by entrepreneurs when making the investment pitch? a. Knowing their audience too well b. Building hand-offs into the presentation c. Reading the presentation slides d. Asking the potential investors a question

c. Reading the presentation slides

What are the benefits of a sole proprietorship? a. Single owner and no responsibility b. Sharing financial rewards with others c. Single owner and full responsibility d. None of the above

c. Single owner and full responsibility

What is the operations, production, and supply section of a new venture business plan typically referred to as? a. The front end of the venture b. The organizational element of the venture c. The back end of the venture d. None of the above

c. The back end of the venture

The essence of this type of story captures the attention of the investor; provides a specific user scenario that is compelling; outlines the customer's current negative outcome; creates tension; shows the solution to relieve the tension. What is this story called? a. The business story b. The opportunity story c. The springboard story d. The Zen story

c. The springboard story

A good executive summary for a new venture business plan should contain which of the following? a. Information showing a solid growth market b. Information confirming a well-defined customer who needs what you sell c. Information on the team suited to execute the plan d. All of the above

d. All of the above

Critical business skills for the venture team include which of the following dimensions? a. Sales and marketing b. R&D c. Running a business or operation d. All of the above

d. All of the above

In a new venture business plan, investors want to see evidence of which of the following? a. A well-defined robust market b. A distinct product or service solution c. A sensible business model d. All of the above

d. All of the above

In the organization section of the new venture business plan, which of the following should the entrepreneur do? a. Describe the management team b. Outline the staffing plan for the venture c. List and describe the Board of Advisors/Directors d. All of the above

d. All of the above

The final checklist for the market analysis section of your business plan would include which of the following? a. Evidence that you have a target market that is healthy and growing b. Evidence that you deeply know customers' needs c. Evidence that you can beat the guys next door d. All of the above

d. All of the above

What is a key milestone that needs to be spelled out in the solutions section of your business plan? a. Completion of the alpha version of your solution b. Completion of the beta version of your solution c. Completion and release of version 1.0 d. All of the above

d. All of the above

What is the purpose of the solutions section of the business plan? a. To describe the product and service portfolio b. To describe the staging of that portfolio c. To describe any IP that is in the business d. All of the above

d. All of the above

Which of the following characteristics does a successful entrepreneur tend to possess? a. Leadership b. Drive c. Self-confidence d. All of the above

d. All of the above

Which of the following is NOT a major section of a new venture's business plan? a. Executive summary b. The business model c. Organization/team d. All of the above are major sections of the plan

d. All of the above are major sections of the plan*

With regard to the business model section of the business plan, an investor wants which of the following questions answered? a. Is there solid, recurring revenue in this business? b. Does the team have the chops to execute? c. Is the team taking advantage of agile supply chains? d. All of the above need to be answered.

d. All of the above need to be answered.

For your go-to-market strategy component of your investment pitch, what are the most important elements to stress? a. The primary route to market b. The branding activities to be pursued c. A only d. Both A and B

d. Both A and B

In what order does an investor typically read a business plan? a. Executive Summary, Business Model, P&L b. Exit Strategy, Executive Summary, Go-to-Market c. Business Model, P&L, Exit Strategy d. Executive Summary, Business Model, Team

d. Executive Summary, Business Model, Team

In your solutions section of a technology-focused business plan which of the following do you want to do? a. Stress your organizational team b. Emphasize your go-to-market strategy c. Show robust financial projections d. Show your IP strategy

d. Show your IP strategy

In a ________, you are the single owner for the venture and you have full responsibility for the ventures operations a. C Corporation b. S Corporation c. Limited Liability Company (LLC) d. Sole Proprietorship

d. Sole Proprietorship

A ________ is a business entity that DOES NOT provide liability protection for the business owners. a. C Corporation b. S Corporation c. Limited Liability Company (LLC) d. Sole Proprietorship or Partnership

d. Sole Proprietorship or Partnership

Which of the following is true about successful entrepreneurs? a. They tend to be intolerant to uncertainty b. They tend not to learn from failure c. They avoid problems d. They use constructive criticism

d. They use constructive criticism

What are the stories that should be told in your investment presentation? a. The story of the customer b. The story of your team c. The story of how you make money d. The story of your key milestones upon financing e. All of the above

e. All of the above