Deck 18: Sources of Capital

Question 1

SoundCloud is valued at $200 million, but is having trouble generating revenue and paying its employees. SoundCloud is in a shortage of:

A) Current capital
B) Valuation
C) Profits
D) Working capital

Answer 1

Working capital

Question 2

Helen has a meeting with a venture capitalist for a Series A round at a $10 million valuation. She has proprietary patents for the latest advancements in facial recognition, a team of five Stanford grads, and seed money from Andreessen Horowitz and Union Square Ventures. She has two enterprise customers. The VC has her interest piqued but declines to invest at this stage. Why?

A) Helen needs more customers
B) Helen should be raising a Series B, not A
C) Helen needs to further build out her team
D) Helen needs better venture capitalists funding her project

Answer 2

Helen needs more customers

Question 3

If an entrepreneur is raising money and a top tier investor is intrigued, she should spend her time convincing this investor instead of taking on meetings from others.

Answer 3

False

Question 4

In an effort to expand quickly, Uber spends a large amount of revenue on opening in international markets. Uber would have a high ________ rate.

A) Churn
B) Burn
C) Loss
D) Cost

Question 5

What is defined as the right but not obligation to take some action in the future?

A) Invest
B) Put
C) Plan
D) Option

Question 6

The value of a real option decreases with the discount rate.

Question 7

Which of the following is not a way for a startup to exit?

A) IPO
B) Acquisition
C) Down round
D) Secondary offering

Question 8

Greg is a founder who needs more money to continue operating his company. The company has a path to profitability and Greg does not want to dilute his equity. He borrows $100 million from the Silicon Valley Bank. What is this an example of?

A) Debt capital
B) Equity capital
C) Private equity
D) Venture capital

Question 9

What is one difference between angels and venture capitalists?

A) Angels write bigger check sizes
B) Angels are more ethical
C) Venture capitalists cause more dilution
D) Venture capitalists are less professional

Question 10

Of the following, which is not a way venture capitalists get the money they deploy?

A) Corporations
B) Pension funds
C) High net worth individuals
D) Investment bankers

Question 11

Amy decides to fund her startup with $100,000 of her personal money, and makes her business profitable in a year with no outside funding. This is an example of:

A) Crowdfunding
B) Debt capital
C) Bootstrapping
D) Auctioning

Question 12

When eBay was first started, it was crowdfunded.

Question 13

Who was an angel investor in Apple?

A) Andy Bechtolsheim
B) Steve Wozniak
C) Mike Markkula
D) Steve Jobs

Question 14

A venture capitalist would prefer a couple big wins and a lot of failures instead of a fair amount of moderate successes.

Question 15

A company is looking to expand internationally. What stage of investment would it typically be at?

A) Seed
B) Series A
C) IPO
D) Series C

Question 16

Which company has an established corporate venture capital arm?

A) Facebook
B) Palantir
C) Google
D) PayPal

Question 17

Why is it difficult to value an early stage company?

A) Uncertain cash flow
B) Low number of employees
C) Growing quickly
D) No revenue multiples

Question 18

What does the PE in PE ratio stand for?

A) Profit, earnings
B) Price, earnings
C) Profit, estimate
D) Price, estimate

Question 19

What is a disadvantage of an IPO?

A) Liquidity
B) Visibility
C) Loss of control
D) New capital

Question 20

Tesla received a loan for over $400 million from the U.S Department of Energy.