SYB302C (copy)

Entrepreneurs cause entrepreneurship.

A. True

B. False

A

What are common motivators for entrepreneurs to start a new venture? Check all that apply.

A. To elevate their independence

B. To earn more money

C. To create new things

D. To increase their freedom

E. To help others

ABCDE

Innovations must be radical and disruptive in order to be viable for new company creation.

A. True

B. False

B

Nike's development of the "Air Jordan" brand is an example of this type of innovation:

A. Marketing innovation

B. Business model innovation

C. Product innovation

D. Service innovation

A

What makes a decision "strategic"? Check all that apply.

A. Results in substantial gains or losses as a result of the decision and its subsequent outcomes

B. Involves planning actions in an uncertain and unpredictable future

C. Requires significant allocations ofresources

ABC

Strategic decisions typically share which four processes? Choose the four that apply.

A. Recognizing a problem situation

B. Generating alternatives

C. Evaluating the various alternatives

D. Assessing the environmental impact

E. Selecting the alternative that best satisfies the evaluation criteria

ABCE

The Opportunity Analysis Canvas is designed to help individuals develop which areas? (Check all that apply).

A. Thinking entrepreneurially

B. Seeing entrepreneurially

C. Acting entrepreneurially

ABC

Entrepreneurs have a natural desire to take risks at a higher level than non-entrepreneurs.

A. True

B. False

B

Which type of individuals are more likely to discover and act on an entrepreneurial opportunity?

A. External locus of control

B. Internal locus of control

B

Which is the more valuable measure of your social capital?

A. The diversity of the people that you know.

B. The number of people that you know.

A

Why build social capital? (Check all that apply.)

A. To be a more valuable collaborator

B. To be more creative

C. To be a more efficient problem solver

D. To be better informed

ABCD

What four attributes influence an industry's favorability to new firm entry? Choose the four that apply.

A. Demand conditions

B. Knowledge conditions

C. Industry lifecycle

D. Innovation potential

E. Industry structureF. Market attractiveness

ABCE

What are the four characteristics of industry structure? Choose the four that apply.

A. Demographics

B. Advertising intensity

C. Firm concentration

D. Regulatory issues

E. Psychographics

F. Capital intensity

G. Firm size

BCFG

Sustainable competitive advantage can only be maintained until competitors are able to duplicate or develop a compelling substitute.

A. True

B. False

A

When developing a new product, it is necessary to meet every customer desire.

A. True

B. False

B

Within the product design and development decisions, successful entrepreneurs create multiple products simultaneously that are uniquely positioned for every potential market segment.

A. True

B. False

B

It is smart to set your pricing significantly lower than competitors' prices in an effort to capture market share and achieve your revenue goals quickly.

A. True

B. False

B

Strategic planning requires near-term commitment for long-term benefits.

A. True

B. False

A

What factors may make it economically unattractive to produce your anticipated product or service? Choose all that apply.

A. Over-designing the product to the point where the price is beyond your customer

B. Designing the product for a market niche that is too small to generate the desired revenue goals of your company

C. Agreeing to minimum production volume requirements that exceed your ability to pay for the production costs and invest in marketing appropriately

ABC

What are the four key items do customers want to know? (Choose Four)

A. How does this impact my end state?

B. Do I have chemistry with this seller?

C. Is this the right solution?

D. Can I afford this solution?

E. What are the technical specifications of the solution?

ABCD

Which "customers" do most solutions involve? (Choose All That Apply)

A. Decision-Maker

B. End-user

C. Recommender

D. Payer

E. Influencer

F. Saboteur

ABCDEF

A "customer archetype" is a "customer type"?

A. True

B. False

B

A winning value proposition typically requires a "gain creator" or "pain killer" for a major "customer job".

A. True

B. False

A

Customers derive value not just from what companies produce in their factories, but also from what companies add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, and upgrades.

A. True

B. False

A

The Total Product Concept consists of which four main elements? (Choose Four)

A. Core

B. Cost of doing business

C. Augmented

D. Potential Product

E. Expected

ACDE

What are the three pillars of Qualitative Research? (Choose Three)

A. In-depth interviews

B. Focus groups

C. Observation

D. Surveys

ABC

What are the three types Of Strategic Partnerships? (Choose Three)

A. Vertical partnerships

B. Co-opetition

C. Acquisitions

D. Horizontal partnerships

ABD

The four purposes of prototypes are: (Choose Four)

A. Pricing

B. Learning

C. Milestones

D. Integration

E. Communication

BCDE

High fidelity prototyping tools are best for concept sketching and basic story boards.

A. True

B. False

B

What is the first step of the Experience Map?

A. The lens

B. The journey model

C. Quantitative information

D. Qualitative insight

A

Customer insights is the fuel that drives effective marketing in all companies.

A. True

B. False

A

Anti-dilution provisions in financing documents protect:

A. (a) founders, by preventing their ownership in a company from being significantly reduced by new investors

B. (b) investors from dilution in the event of stock splits, stock dividends or sales of stock at a price lower than that the investor paid

C. (c) employees who have options issued from the company's option pool

D. (d) both (a) and (b)

B

Bridge financing is a term that means:

A. An interim financing round that provides cash to a company that is anticipating either a larger financing round, a merger or an initial public offering

B. A special kind of construction loan

C. An interim financing round that provides cash to a company that "bridges" the gap between cash on hand and the next monthly payroll

D. None of the above

A

The key components of a business plan are:

A. Income Statement, Balance Sheet, Cash Flow Statement

B. Company Description, Product Description, Market Analysis, Headcount Plan, Customer List, Patents

C. Executive Summary, Company Description, Product/Service Description, Market Opportunity, Sales & Marketing Plan, Management Team, Financial Projections

D. Early-stage companies do not need to write business plans because they new to the market and too many variables are unknown

C

The 4 "M's" that investors look for in a company are:

A. Momentum, Management Team, Market Potential, Money

B. Monthly Sales, Management Team, Money, Mystery

C. Momentum, Monthly Sales, Money, Management Team

D. None of the above

A

Which of the following is false about a Term Sheet?

A. It includes the pre-money valuation of the company.

B. It is binding on the investor for 60 days.

C. It specifies the use of proceeds.

D. It specifies the form of investment.

B

The primary purpose of the 'cap' in a convertible note is:

A. To convert into equity at the value of the next round of financing, regardless of the valuation of that round.

B. To delay the valuation of an early-stage company.

C. To establish an arbitrary valuation of an early-stage company.

D. To place a ceiling on the valuation at which the note converts into equity.

D

Series A, Series B and Series C preferred refers to the:

A. Value of the preferred stock.

B. Priority of the preferred stock in liquidation.

C. Class of the preferred stock.

D. Nothing - they are simply given a letter to distinguish each preferred stock issuance.

C

An investor invests $2.5 million on $5 million post-money valuation in a participating Preferred Stock. The company subsequently sells for $10 million. What is the ownership of the Preferred investor and how much of the $10 million will the investor receive?

A. 33%; $3.3 million.

B. 50%; $5 million.

C. 50%; $6.25 million.

D. 33%; $5 million.

C

Which of the following statements about a balance sheet is correct?

A. Assets = Liabilities + Equity

B. Equity = Assets - Liabilities

C. Liabilities = Assets - Equity

D. All of the above

D

What is the simplest form of corporate structure?

A. General partnership

B. Limited partnership

C. Unincorporated sole proprietorship

D. Limited liability company (LLC)

C

What is the balance of convertible notes (including accrued interest) at December 31, 2014?

A. $247,500

B. $150,000

C. $82,500

D. $165,000

D

What is NEWCO's Shareholders' Equity at December 31, 2014?

A. $(45,000)

B. $(4,400)

C. $(22,500)

D. $(116,000)

D

What is NEWCO's pre-tax income or loss for the year 2014?\\

A. Loss of $117,000

B. Loss of $67,000

C. Gain of $67,000

D. Gain of $117,000

A

Deferred revenues are revenues that have been booked (contracted for) but not yet earned as of a reporting date. What is Newco's deferred revenue balance at December 31, 2014?

A. $240,000

B. $220,000

C. $65,000

D. $120,000

B

What is the accrued expense balance on the balance sheet at December 31, 2014?

A. $8,000

B. $4,000

C. $16,000

D. $12,000

A

Early stage companies, owing to the lack of history and collateral, rarely raise money via debt with one notable exception, which is:

A. Preferred stock, with a dividend that acts like an interest rate

B. Convertible notes, which are a hybrid, more closely related to equity

C. Common stock

D. Shareholder loans

B

Which of the following is TRUE regarding intermediary sources of capital? (Select all that apply.)

A. This category includes investment bankers.

B. They can introduce you to other financing sources.

C. They are a prime source of early-stage capital.

D. They may charge a fee for their services.

ABD

Strategic or corporate venture capital firms make investments:

A. Primarily outside of their core businesses to diversify their risk

B. Within their core businesses to achieve financial and strategic returns

C. Only to achieve financial returns

D. To build risk portfolios with excess cash of the corporation

B

The primary sources of seed and early stage capital include the following: (Select all that apply.)

A. Angel investors

B. Management team

C. Founders

D. IPO's

ABC

Which of the following statements is CORRECT about friends and family investors? (Select all that apply.)

A. Terms should always be put into writing

B. They invest because of the relationship to the founder(s)

C. When discussing an investment with a friends and family investor, the entrepreneur should clearly discuss risk versus reward

D. Only equity investments are allowed given the relationship to the founder

ABC

According to the U.S. Federal Reserve, what percentage of all startups are bootstraped?

A. Less than 20%

B. More than 70%

C. About 50%D. Almost 90%

B

What is the primary benefit to the entrepreneur of bootstrapping his/her company:

A. The longer time it takes to get to market allows the entrepreneur time to make sure the product works perfectly

B. If successful, the entrepreneur retains a greater share of the exit value (or a higher valuation during fund raising)

C. Bartering with established companies develop lasting relationships that would not otherwise be developed

D. It allows the entrepreneur to be creative in finding ways to achieve progress without money

B

One of the disadvantages of an entrepreneur going into an accelerator program is that the entrepreneur:

A. Spends a lot of time meeting investors interested in future financing rounds

B. Is often provided new office space

C. Must give up equity to participate

D. Spends too much time receiving training that strengthens his/her business expertise

C

Which of the following is true about angel investors:

A. They invest twice as much as venture capital funds do each year

B. They provide critical seed capital that other funding sources do not focus on

C. They are often motivated by factors other than financial return

D. All of the above

D

Seed or early stage investors typically invest in companies that have all of the following attributes: (Select all that apply.)

A. Is at cash flow break even

B. A promising product concept

C. Is seeking funding of $5 million or less

D. Early customer validation

BCD

Which of the following statements is correct about the due diligence process? (Select all that apply.)

A. Due diligence is not time consuming if done properly

B. Due diligence is a two-way process

C. Prospective investors will want to investigate legal, financial and strategic matters

D. The key to success in due diligence is advance preparation and cooperation among the parties

BCD

Which of the following items discovered in the due diligence process could be a cause for concern by an investor, which could ultimately lead to a decision by the investor to NOT invest?

A. Large accounts payable for goods and services that are all "current" (i.e., within the terms offered by the vendor)

B. A large shareholder loan that will be paid upon completion of the current financing

C. Significant related party transactions that are properly documented and performed on an arms-length basis

D. Accounts receivable from 20 very small customers which are 10 days past due

B

When negotiating terms sheets with prospective investors, which of the following are correct? (Select all that apply.)

A. Experience from past deals should be used to negotiate the current term sheet.

B. Don't take everything the other side says at face value - they may be posturing.

C. Both the investor and entrepreneur need to win.

D. Compromise indicates to the investor that the entrepreneur is desperate for funding.

BC

Valuation of startup companies can be done objectively by following traditional valuation methods.

A. True

B. False

B

Choose the statement that is NOT correct?

A. ROI = Exit Value ÷ Post-money valuation

B. If the average PE ratio of companies similar to your company in the industry in which you will operate is 15X, and your projected after tax earnings in year 5 is $3 million, a reasonable exit valuation for your company in year 5 is $45 million

C. The Wiltbank Study indicates that investors expect an IRR of 15% in six years

D. Post-money valuation = Exit Value ÷ ROI

C

What factor(s) can impact the valuation of your company?

A. Hot sectors

B. Management team experience

C. Early traction (revenues, partnerships, etc.)

D. A well developed V1 product

E. All of the above

E

Which of the following statements about term sheets is correct? (Select all that apply.)

A. They state the pre-money valuation and the amount of the investment.

B. They are binding on the investor for 60 days.

C. No shop clauses are beneficial to the investor but not the company.

D. They normally include a statement on the use of the proceeds of the investment.

ACD

Equity securities include all of the following: (Select all that apply.)

A. Warrants

B. Preferred stock

C. Convertible notes

D. Options

ABD

A cap on a convertible note is used to:

A. Establish the maximum pre-money valulation at which the note will convert

B. Put a limit on the maximum interest rate payable on the note

C. Secure the payment of the note upon liquidation

D. Put a value on the company

A

Which of the following is not a characteristic of Preferred Stock?

A. Preferred stock is an equity instrument with some characteristic of debt

B. Preferred stock shareholders receive the greater of the original purchase plus accrued dividends OR a percentage of the liquidation proceeds on an 'as-converted" basis in a standard liquidation of the company

C. Anti-dilution provisions protect the preferred shareholder's pro-rata interests

D. It is the financing vehicle of choice for venture capitalists

C

Which of the following statements is correct about what prospective investors want to see when you pitch your company to them? (Select all that apply.)

A. Your company should be in a new industry where the investor has not made previous investments to enable the investor to diversify his/her risk

B. Investors don't care how or if your product works because they assume it does or will

C. Why customers will buy your product/solution

D. You and your team have an in-depth knowledge of the market

BCD

When an entrepreneur tells an investor "I have no competition", what the investor hears and thinks is:

A. (a) The market the entrepreneur is going after must not be very big if no other competitors are entering it

B. (b) That's great! This entrepreneur is pretty smart to have built a product in a big market that has no competing products to worry about

C. (c) This entrepreneur doesn't know the market very well

D. (d) Both a and c

D

What is Guy Kawasaki's 10/20/30 rule?

A. 10 slides, 20 minutes, 30-point font

B. 10-point font, 20 slides, 30 minutes

C. 10 minutes, 20-point font, 30 slides

D. None of the above

A

What is the one attribute of every "perfect" pitch deck, regardless of its size?

A. They have an appendix with additional slides not covered during the actual pitch session.

B. They tell a compelling story.

C. They all have at least one embedded video.

D. They have bright colors, professional fonts and creative graphics to enhance the presentation.

B

When discussing/presenting the Competition slide in a pitch deck, which of the following statements is correct?

A. Point out why your product or solution is better but never "knock" the competition.

B. Highlight how bad the competitors' product is.

C. If there is no competition in your market, this slide is unnecessary.

D. Never discuss competitive products by name - otherwise, your prospective investors may seek out your competitors and invest in their products.

A

The appendix is useful for:

A. Putting information into the deck that you want to have available in the event questions arise after the pitch to which these slides relate.

B. Hiding problematic information that you'd rather not talk about.

C. Providing a list of all slides in the deck.

D. Nothing - an appendix should never be included in your pitch deck.

A

When you "tell your story" to prospectors, you should do all of the following: (Select all that apply.)

A. Be prepared to go into great details, especially if your business is complicated.

B. Discuss who you are, where you're from and why you're starting the company.

C. Be genuine, passionate and try to connect directly with the audience.

D. Tell interesting stories constructed from anecdotes from your life that an investor might think is interesting.

BCD

Which of the following is a "Don't" that should be avoided in making an investor pitch?

A. Reading your slides

B. Exaggerating

C. Focusing only on positives

D. All of the above

D

Which of the following are "Do's" of making a pitch: (Select all that apply.)

A. Connect emotionally with the investor.

B. Give a product demo, if applicable.

C. Forecast 'hockey stick' growth to ensure the investor sees that market as having significant potential.

D. Highlight your and your management team's prior successes.

ABD

Assuming that an entrepreneur must speak to between 10 to 15 prospective investors to actually have one investor "close"; that the amount of each investor's investment is $50,000; and you are trying to raise a minimum of $1 million. How many prospective investors must the entrepreneur speak to before they successfully raise $1 million?

A. 100

B. 10 to 15

C. It is impossible to estimate based on the data provided.

D. 200 to 300

D

Activities through which cash is obtained from and paid to lenders, owners, and investors are called _____ activities.

A. operating

B. investing

C. financing

D. marketing

C

when developing a new product, it is necessary to meet every customer details

A. True

B. False

B

Which Of The Following Items Discovered In The Due Diligence Process Could Be A Cause For Concern By An Investor, Which Could Ultimately Lead To A Decision By The Investor To NOT Invest?

A. Significant related party transactions that are properly documented and performed on an arms-length basis

B. A large shareholder loan that will be paid upon completion of the current financing

C. Large accounts payable for goods and services that are all "current" (i.e., within the terms offered by the vendor)

D. Accounts receivable from 20 very small customers which are 10 days past due

B

A cap on a convertible note is used to:

A. Establish the maximum pre-money valuation at which the note will convert

B. Put a limit on the maximum interest rate payable on the note

C. Secure the payment of the note upon liquidation

D. Put a value on the company

A

Entrepreneurs have a natural desire to take risks at a higher level than non-entrepreneurs.

A. True

B. False

B

Working for a very large organization in the tractor manufacturing industry, John always heard complaints from customers about the parts and service aspect of the business. Taking an early retirement, John started his small business to address the customer complaints he had been hearing. Which of the following best describes the factor that led John to this business idea?

A. A similar business

B. Chance

C. Work experience

D. Family and friends

C

What are the Customer Segments that your company or organization services?

A. Customer segments define the different groups of products or service

B. customer segments define the different groups of people or organizations to service

C. Customer segments define the different groups of partners to serve

D. Customer segments define the different groups of suppliers to serve

E. All of the above

E

What is the value proposition that your company or organization offers to solve customer problems and satisfy their needs?

A. Value proposition describes the bundle of products or services that create value for a specific customer segment

B. Value proposition describes the profits and losses

C. Value proposition describes the price and service

D. Value proposition describes the target market

E. None of the above

A

Focus group method refers to gathering data by sample observation

A. True

B. False

B

Search and capture of new ideas that lead to business opportunities is called opportunity recognition

A. True

B. False

A

Which of the following statements is CORRECT about friends and family investors?

A. When discussing an investment with a friends and family investor, the entrepreneur should clearly discuss risk versus reward

B. They invest because of the relationship to the founder(s).

C. Only equily investments are allowed given the relationship to the founder

D. Terms should always be put into writing

E. All of the above

F. None of the above

E

_____ is a process of producing an idea or opportunity that is novel and useful, frequently delivered from making connections among distinct ideas or opportunities.

A. Ethics

B. Creativity

C. Imitation

D. Flexibility

B

Customers derive value not just from what companies produce in their factories, but also from what companies add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, and upgrades.

A. True

B. False

A

what is the simplest form of corporate structure

A. General partnership

B. Limited partnership

C. Unicorporated sole proprietorship

D. Limited LLC

C

When people find a way to turn their hobbies into successful businesses, which of the following factors is considered as leading them to their business idea?

A. Family and friends

B. Education and expertise

C. Serendipity

D. Personal interest

D

A cost structure is all costs incurred to operate a business model. By owling

A. True

B. False

A

The key market knowledge for a small business

A. is to know how to seek and obtain external financing.

B. focuses on its immediate marketplace and communities.

C. is to know how to cash out through the sale of an initial public offering of stock or through the sale of the company to a larger company.

D. focuses on the need to know how to dominate the market and grow dramatically and quickly.

B

All of the following are examples of long term incentives to employees that help retain valuable team members EXCEPT

A. profit-sharing plans.

B. stock options.

C. stock grants.

D. employee bonuses.

D

The primary sources of seed and early stage capital include the following

A. Founders

B. Management team

C. Angel investors

D. All of the above

E. None of the above

D

Which of the following is True regarding intermediary sources of capital?

A. This category includes investment bankers.

B. They can introduce you to other financing sources.

C. They may charge a fee for their services.

D. All of the above

E. None of the above

D

Which of the following is not a characteristic of Preferred Stock?

A. Preferred stock is an equity instrument with some characteristic of debt

B. Preferred stock shareholders receive the greater of the original purchase plus accrued dividends OR a percentage of the liquidation proceeds on an 'as-converted" basis in a standard liquidation of the company

C. Anti-dilution provisions protect the preferred shareholder's pro-rata interests

D. It is the financing vehicle of choice for venture capitalists

C

An example or photo of your product or service is a great visual aid in helping you sell your plan in your written market plan. This is an example of

A. Defining your product price

B. Defining your product.

C. Using a promotinal tool for your product

D. Defining a distribution system for your product

B

What are the characteristics of industry structure?

A. advertising intensity

B. firm size

C. Demographics

D. capital intensity

E. All of the above

F. None Of the above

E

The percentage amount that the payout of an investment differs from original cost is called as

A. dividend.

B. gain on investment.

C. risk.

D. interest.

B