Deck 10: Organizing the Venture Team

Question 1

What is typical number of people on a venture's Board of Directors?

A) 7
B) 5
C) 9
D) 12

Answer 1

B

Question 2

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

Answer 2

A

Question 3

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

Answer 3

B

Question 4

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

Question 5

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

Question 6

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

Question 7

Advisory board members usually obtain what percentage of stock in a venture?

A) .1-.2%
B) 5%
C) 1-2%
D) 1.5%

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

What class of stock do S corporations and LLCs have?

A) Common
B) Preferred
C) Diluted
D) Inflated

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

Which of the following characteristics does a successful entrepreneur tend to possess?

A) Leadership
B) Drive
C) Self-confidence
D) All of the above

Question 20

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

Question 21

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

Question 22

For your venture project, which form of legal entity do you think is best and why? What are the tradeoffs that you need to weigh in that consideration?

Question 23

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

Question 24

Why do many entrepreneurs prefer an LLC as a startup legal organization rather than a Subchapter S or a C Corp or a Sole Proprietorship?

Question 25

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

Question 26

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

Question 27

For your venture, what are the key skills represented on your team and what other skills do you require for a successful startup,
e.g. for the first two years of your business? And, what two or three types of individuals would be ideal board members?

Question 28

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