Deck 12: Bootstrapping and Crowdfunding for Resources

Question 1

Hard work an entrepreneur personally puts in to get a business up and running is known as ______.

A)penny pinching
B)bootstrapping
C)sweat equity
D)affordable loss

Answer 1

C

Question 2

Jose is opening a small restaurant.On weekends,he works with his cousin to construct the tables,chairs,and counters that will go into the restaurant.What is the name given to the result of these efforts?

A)labor equity
B)owner labor
C)sweat equity
D)family ownership

Answer 2

C

Question 3

SuLin is setting up a small construction shop and uses his personal credit card to purchase the company's basic equipment.This process is referred to as which of the following?

A)venture capital
B)sweat equity
C)external funding
D)bootstrapping

Answer 3

D

Question 4

Wikihouse freely provides user-submitted blueprints for anyone who wishes to build an affordable custom-built house with 3D printing.This is an example of ______ because ______.

A)crowdsourcing; it uses the expertise of the crowd to greatly reduce the cost of design and construction
B)crowdfunding; it uses the Internet to quickly generate a large user base for Wikihouse
C)bootstrapping; it allows amateur designers an opportunity to disrupt the construction business
D)Wikifunding; it uses the open-source Wikipedia platform to generate new solutions and opportunities

Question 5

Crowdsourcing is a bootstrapping method that saves money while obtaining valuable ______ resources.

A)information
B)financial
C)technological
D)social media

Question 6

Crowdsourcing is a resource for ______.

A)money
B)investors
C)physical capital
D)labor and talent

Question 7

When someone states,"I don't have money to start a business," what fact might you tell them to consider?

A)Most businesses start without any formal investment.
B)This is a valid reason for not starting a business.
C)Formal investment will be needed to make a successful company.
D)People who have no money cannot start a business.

Question 8

What is the name given to the process of building a business with very little,or no,funding?

A)seed startup
B)bootstrapping
C)zero funding
D)skeleton funding

Question 9

Using the Internet to attract,aggregate,and manage ostensibly inexpensive or even free labor from enthusiastic customers and like-minded people is called ______.

A)crowdfunding
B)penny pinching
C)crowdsourcing
D)bootstrapping

Question 10

What are "the 3 Fs" for financial assistance?

A)the three major sources of formal funding
B)a slang term meaning angel investors
C)family,friends,and fools
D)free financial funding

Question 11

Crowdfunding and crowdsourcing would both be considered which of the following strategies?

A)formal fundraising
B)bootstrapping
C)angel investing
D)penny pinching

Question 12

People sharing their medical information online so as to help in the development of pharmaceuticals and medical devices that can be used to improve medical treatment is an example of ______.

A)networking
B)crowdfunding
C)crowdsourcing
D)angel investing

Question 13

In reference to crowdfunding,a backer is best described as ______.

A)a person who will pay back a loan if you fail to do so
B)a person who contributes support in a crowdfunding venture
C)a financial institution that lends money to a startup
D)the financial institution that manages the transfer of money

Question 14

Wikipedia encouraging its users to edit and update its free online encyclopedia is an example of ______.

A)patronage
B)equity
C)crowdfunding
D)crowdsourcing

Question 15

Which of the following is an advantage of bootstrapping?

A)You can expand your business faster.
B)You will avoid risk.
C)Outside investors are more likely to fund you if you have bootstrapped.
D)You have tapped into a lucrative source of advice and connections.

Question 16

Seth starts his company with computers that he found on craigslist.com and some office furniture from the basement of his parents' home.This strategy would be considered which of the following?

A)startup
B)sweat equity
C)penny pinching
D)zero-based funding

Question 17

A company launching 100% through bootstrapping would use what source of funding?

A)angel investor
B)venture capital funds
C)personal funds
D)a bank loan

Question 18

Using whatever resources you have to save money while you are getting your business started is referred to as what type of strategy?

A)seed money
B)guerilla startup
C)penny pinching
D)skeletal startup

Question 19

The process of raising capital for a new venture from a large audience,usually through the Internet,is called ______.

A)crowdfunding
B)penny pinching
C)crowdsourcing
D)bootstrapping

Question 20

Crowdfunding is a resource for ______.

A)talent
B)intellectual property
C)money
D)labor

Question 21

As discussed in the text,Crowdfunder,AngelList,Fundable,and Circle Up are examples of sites that ______.

A)allow funding requests under $1,000
B)allow funding requests over $5 million
C)give backers the opportunity to invest in exchange for ownership or future returns
D)do not allow companies to offer equity as a reward

Question 22

Which of the following needs can be addressed primarily through crowdsourcing?

A)A company wants to procure a library of freely downloadable photographs for its photo app.
B)A company wants to increase profits by raising subscription fees to its video streaming app.
C)A company wants to reduce waste in its manufacturing process by working with a single vendor.
D)A company wants to raise funding to support expansion of its product lines.

Question 23

What is characteristic of the reward model of crowdfunders?

A)Investors provide financial support with no expectation of direct return.
B)Investors are given prizes for their financial support,such as product samples or experiences.
C)Equity is exchanged for the contribution.
D)Funds are treated as loans.

Question 24

What is characteristic of the patronage model of crowdfunders?

A)Investors provide financial support with no expectation of direct return.
B)Investors are given prizes for their financial support,such as product samples or experiences.
C)Equity is exchanged for the contribution.
D)Funds are treated as loans.

Question 25

The most established crowdfunding site is ______.

A)Indiegogo
B)Kickstarter
C)Crowdrise
D)Tilt

Question 26

What is characteristic of the lending model of crowdfunders?

A)Investors provide financial support with no expectation of direct return.
B)Investors are given prizes for their financial support,such as product samples or experiences.
C)Equity is exchanged for the contribution.
D)Funds are treated as loans.

Question 27

What is the most effective reward to offer to Kickstarter contributors?

A)a cash award
B)awards-in-kind that offer equivalent value for the cash contributed
C)promising contributors that they will be the first to receive the product,along with a contribution award
D)offering to list the person as a founding contributor on all product and service literature

Question 28

According to the 2012 American Dream Composite Index,______ tend to be between the ages of 24 and 35,are more likely to be men,and to have an income of over $100,000 per year.

A)bootstrappers
B)crowdsourcing participants
C)angel investors
D)crowdfunding backers

Question 29

How much money can be raised through crowdfunding?

A)only small amounts,under $1,000
B)small amounts,generally under $5,000
C)as much money as can be raised through family and friends
D)from small amounts to amounts in the millions of dollars

Question 30

How does Kickstarter get its money?

A)by charging a percentage of the funds obtained from each successful project
B)by charging members a modest fee for posting their request
C)by using crowdfunding themselves
D)by listing themselves as a nonprofit and getting grants

Question 31

What is characteristic of the investor model of crowdfunders?

A)Investors provide financial support with no expectation of direct return.
B)Investors are given prizes for their financial support,such as product samples or experiences.
C)Equity is exchanged for the contribution.
D)Funds are treated as loans.

Question 32

According to the text,small companies and individuals may choose to manufacture prototypes in China because Chinese factories can manufacture in ______ batches at ______ costs.

A)multiple; moderate
B)small; low
C)frequent; high
D)large; low

Question 33

Crowdfunding can help you save money on marketing because it provides ______.

A)customer service automation
B)your customers with a free sample of your product
C)you with an idea of the level of interest in your product
D)free access to mailing lists

Question 34

Which of the following could not be offered in a Kickstarter campaign?

A)a free product or product sample
B)participation in a cash award raffle
C)presale delivery of the product or service
D)free tickets to a play

Question 35

Users of the popular GPS app Waze periodically report driving conditions while on the road,allowing all users to benefit from live traffic updates.Waze is an example of crowdsourcing because ______.

A)users have free access to the same traffic information
B)users freely contribute traffic information for use by the app
C)the app has a very large and loyal user base
D)the app asks for donations at the end of each drive

Question 36

How does equity crowdfunding differ from other types of crowdfunding?

A)Investors are given the opportunity to become company shareholders.
B)Funds are raised from a community of angel and venture capitalists.
C)Funds are provided by the government.
D)Financial institutions are allowed to raise funds on these sites.

Question 37

What made equity crowdfunding in the United States possible?

A)the success of other crowdfunding sites
B)the JOBS Act,signed by President Obama
C)changes in Dow Jones
D)advances in the software of crowdfunding sites

Question 38

What must be offered by someone who uses Kickstarter for a fundraising project?

A)They must create something to share with others.
B)They must offer to return the exact amount of the contributed funds within a given period of time.
C)They must offer to give a portion of their funds to a charity.
D)They must offer a moneyback guarantee if a backer decides to rescind his or her contribution.

Question 39

What happens on Kickstarter if the funds are not raised in the given amount of time?

A)The project is automatically extended for another 30 days.
B)The project owner can keep the money raised up to the end of the period.
C)The project owner can transfer funds earned to a project of his or her choice.
D)The money is not earned and no money will be received.

Question 40

What happens if the funds raised on Kickstarter exceed those specified at the start of the project?

A)The excess money is contributed to a general fund.
B)The owner of the project can keep the excess funds.
C)No one is allowed to contribute once the goal has been attained.
D)The excess must be returned to the last contributors.

Question 41

Which crowdfunding platform focuses on science-related projects?

A)RocketHub
B)GoddardGroup
C)OurCrowd
D)Patreon

Question 42

When should you begin broadcasting your product to attract an audience?

A)when your product is ready to ship
B)when your product is in production
C)when you have your first working prototype
D)now

Question 43

Crowdsourcing would be the fastest way of raising financial capital for your business.

Question 44

According to the text,in the crowdfunding model,the ______ is everything.

A)formal proposal
B)video pitch
C)written description
D)sales pitch

Question 45

Which of the following accurately describes a major advantage to crowdfunding?

A)Projects are easy to conduct.
B)There are different options in getting funded,aside from giving a part of the company away.
C)It is relatively risk free.
D)It is the easiest way to get worldwide recognition.

Question 46

As recent studies have shown,projects with spelling mistakes are how much less likely to be successful than projects without?

A)13%
B)27%
C)50%
D)75%

Question 47

Lorraine offers to give people a percentage of the profits earned from her theater production as a reward for donating $100 to the production's equipment.Kickstarter did not approve her campaign because ______.

A)it was a theater production and not a product
B)she wanted to offer a financial reward
C)she was asking too much of an investment,given the reward
D)she was asking too little of an investment,given the reward

Question 48

If you have a successfully crowdfunded product and you know you are going to miss your advertised ship date,what should you do?

A)Do nothing.
B)Change the date on your crowdfunding site but do not draw attention to it.
C)Be honest; alert your backers and notify others through the crowdfunding site.
D)Shift the blame to someone else (manufacturers,distributors,suppliers,etc.).

Question 49

When borrowing from friends and family,it is better to treat the arrangement as a formal loan.

Question 50

If you cannot convey your product or service idea to your audience of prospective financial backers in a few short sentences,you should ______.

A)provide everyone with a detailed business plan document.
B)abandon your product or service idea.
C)spend time getting a clearer sense of the essence of your product.
D)remind your audience that they are missing out on a unique opportunity.

Question 51

Research has shown that what percentage of crowdfunded products are delivered later than expected?

A)25%
B)40%
C)60%
D)75%

Question 52

Greg is using a fundraiser site and is offering 10 shares of stock to those who contribute a minimum of $100 to his product.What model of crowdfunding is Greg using?

A)investor
B)patronage
C)reward
D)lending

Question 53

As described in the text,one of the problems with the Coolest Cooler and its Kickstarter campaign was that ______.

A)the USB charger caused electric shocks to several customers
B)shipping was too expensive for more customers
C)supporters lost faith over delayed production
D)they crowdfunded on multiple sites,betraying community guidelines

Question 54

In the patronage model,investors will contribute to your project with no expectation of direct return.

Question 55

Crowdfunding entrepreneurs should set a funding target that is ______.

A)aggressive to signal confidence in the product or service for potential investors.
B)low and easy to outperform in order to generate buzz around the product or service.
C)realistic enough to attract backers but high enough to cover costs.
D)as high as possible to generate as much initial cash as possible to infuse into the business.

Question 56

Kevin is about to launch a crowdfunding campaign and posts a request on his Facebook page,asking people to share their experiences on crowdfunding sites.What element of conducting a campaign is Kevin observing?

A)Set the right fundraising goal.
B)Practice the pitch.
C)Seek and accept advice.
D)Get the campaign started.

Question 57

In the investor model,crowdfunding backers will expect an equity stake in your business.

Question 58

When conducting a crowdfunding campaign,why is it important to talk to others who have used crowdfunding?

A)You will get a better idea of what to do and what to avoid in your campaign.
B)You can engage them in your own campaign.
C)You can gain valuable information about their product or service.
D)They may want to buy your business.

Question 59

Which crowdfunding platform allows its patrons to fund illustrators,authors,podcasters,musicians,and other independent creators?

A)RocketHub
B)Crowdcube
C)OurCrowd
D)Patreon

Question 60

You would like to raise funds for a foodbank in your local community.Kickstarter would be an excellent source for the initial funds.

Question 61

Crowdfunding is a resource for talent and labor,and crowdsourcing is a resource for money.

Question 62

Indiegogo is the largest global crowdfunding site in the world.

Question 63

Research has shown that the majority of crowdfunded projects are delivered later than expected.

Question 64

There is no time limit for trying to raise funds through Kickstarter.

Question 65

The most successful crowdfunding efforts are a result of testing,refining,and planning.

Question 66

Bootstrapping and starting slowly enables entrepreneurs to avoid any and all risk.

Question 67

Most entrepreneurs choose to seek out angel investors or other external investors in the beginning.

Question 68

When seeking advice from other crowdfunders,focus on those who have been successful; there's little to learn from those who failed.

Question 69

If you choose the right bootstrapping strategy,you can likely avoid having to invest sweat equity.

Question 70

Imagine that you have developed a software application and want to raise money for legal advice,filing initial business and regulatory forms,and funding your travel and marketing expenses.Describe how you would fund these early efforts.

Question 71

Crowdfunding backers invest solely on the merits of a product rather than their impression of the entrepreneur involved with the product.

Question 72

Equity crowdfunding is increasing in popularity all over the world.

Question 73

Thanks to the Internet,the likelihood of a new business getting formal investment is pretty good.

Question 74

According to the text,a disadvantage of bootstrapping and building up a business piece by piece is that you're less likely to generate a larger customer base.

Question 75

One of the advantages of crowdfunding is that the audience does not expect you to have a good product pitch.They understand that you are in the early stages of your product or service development.

Question 76

Crowdfunding has been used to raise billions of dollars for all kinds of industries.

Question 77

When setting a funding goal,focus on how much money you would like to have rather than on how much you will need.

Question 78

Crowdfunding offers the advantage of giving you an idea of the level of enthusiasm and interest in your product or service before you even launch.

Question 79

John is raising money on a crowdfunding site,and in return for contributions,offers to let the contributor purchase prelaunch product.John is using a patronage model of crowdfunding.

Question 80

The first step entrepreneurs should take before starting a crowdfunding campaign is to begin manufacturing the product.