Question 1

When a potential investor asks a question that cannot be immediately answered, an entrepreneur should just "wing it" by making up a plausible answer.

Accepted Answer

It's important for an entrepreneur to maintain credibility and trustworthiness. If they don't know the answer, it's better to admit it and offer to find out and follow up later. Making up an answer can lead to misinformation and damage the relationship with the potential investor.

Question 2

A business incubator may be a non-profit organization sponsored by local businesses, governments, and universities to nurture entrepreneurship in a local geographic area.

Accepted Answer

Business incubators are designed to support the successful development of entrepreneurial companies through an array of business support resources and services, often sponsored by local businesses, governments, and universities to foster economic growth in a specific geographic area.

Question 3

A commercial business incubator is usually a cooperative venture between a university and local business community or government and focuses on stimulating and supporting growth in a local economy.

Accepted Answer

The answer of A commercial business incubator is usually a...

Question 4

The Austin Technology Incubator (ATI), the Advanced Technology Development Center (ATDC), and the Illinois Technology Enterprise Center (ITEC) are all examples of a non-profit business incubator.

Accepted Answer

All three organizations, the Austin Technology Incubator (ATI), the Advanced Technology Development Center (ATDC), and the Illinois Technology Enterprise Center (ITEC), are designed to support the growth and success of startup companies by providing resources, mentorship, and networking opportunities, typically operating on a non-profit basis to foster innovation and economic development.

Question 5

Venture capitalist firms generally offer fee- or equity-based business development and administrative services such as office space, telecommunications hookups, reception and conference room areas, computer networking facilities, mentoring, and referrals to potential investors.

Accepted Answer

Venture capital firms primarily provide funding and strategic guidance rather than offering administrative services like office space or telecommunications hookups, which are typically provided by business incubators or accelerators.

Question 6

A commercial business incubator generally offers the same development and support services as a non-profit business incubator.

Accepted Answer

Both commercial and non-profit business incubators typically offer a range of development and support services to startups, including office space, mentorship, access to networks, and sometimes funding, aiming to help these businesses grow and become self-sufficient.

Question 7

Commercial business incubators generally require hefty fees for business development services plus a large equity position in a startup business.

Accepted Answer

Commercial business incubators typically charge fees for their services and may also take an equity stake in the startup businesses they support.

Question 8

For many entrepreneurs, starting a new e-business under the wing of a commercial business incubator may be most appealing because it offers access to expensive services at a low cost.

Accepted Answer

The answer of For many entrepreneurs, starting a new e-business...

Question 9

One of the primary advantages of joining a business incubator portfolio of companies is the ability to share ideas and discuss startup problems with other entrepreneurs whose companies are also in the portfolio.

Accepted Answer

Business incubators often foster a community environment where entrepreneurs can share ideas, challenges, and solutions, benefiting from the collective experience and knowledge of the group.

Question 10

An alternative to non-profit or commercial business incubators is self-incubation by joining a group of entrepreneurs whose members share ideas, discuss entrepreneurial problems, and generally support each other's businesses.

Accepted Answer

Self-incubation involves entrepreneurs coming together to form a supportive community where they can share ideas, solve problems, and provide mutual support, serving as an alternative to traditional incubation models.

Question 11

Finding unique and inventive ways to acquire resources for a startup is a form of self-funding called:

Accepted Answer

Bootstrapping refers to funding your company's startup and growth through internal cash flow and being cautious with expenses, rather than relying on external funding from investors or loans.

Question 12

The first source of startup money an entrepreneur often taps is:

Accepted Answer

Entrepreneurs often use their own personal savings as the first source of startup funding because it is readily accessible and does not require external approval or repayment terms.

Question 13

More than half of all informal investing in U.S. startups and growing companies is by:

Accepted Answer

The answer of More than half of all informal investing...

Question 14

Which of the following investor categories has been called the "lifeblood of U.S. entrepreneurship?"

Accepted Answer

Informal investors, often referred to as "angel investors," are considered the lifeblood of U.S. entrepreneurship because they provide critical early-stage financial support to startups and entrepreneurs, often filling the gap between personal financing and larger venture capital investments.

Question 15

The investor group that primarily invests in an entrepreneur's strengths rather than his or her new business idea is:

Accepted Answer

The answer of The investor group that primarily invests in...

Question 16

The easiest startup money an entrepreneur may ever find can come from his or her:

Accepted Answer

Friends and family often provide the most accessible source of funding for new entrepreneurs due to their personal relationship and willingness to invest in the entrepreneur's success, even when the business is too early or risky for professional investors.

Question 17

To avoid misunderstandings, an entrepreneur soliciting startup money from his or her network of family members and friends should:

Accepted Answer

It's crucial for an entrepreneur to ensure that their family members or friends can afford to lose the money they invest, to avoid personal and financial strain on relationships if the startup fails.

Question 18

Which of the following issues reflects the downside of accepting startup funds from family members and friends?

Accepted Answer

Accepting startup funds from family and friends can lead to business misunderstandings that might undermine personal relationships. Mixing business with personal relationships can create tension and conflict if disagreements or failures occur.

Question 19

After tapping into his or her friends and family network, the next step an entrepreneur might take in seeking startup funding is to approach:

Accepted Answer

Angel investors are often the next step for entrepreneurs seeking funding after exhausting their friends and family network. They are individuals who provide capital for startups, usually in exchange for convertible debt or ownership equity.

Question 20

An accredited investor who joins an angel investment club must have:

Accepted Answer

The definition of an accredited investor, according to the U.S. Securities and Exchange Commission (SEC), includes having a net worth exceeding $1 million (either individually or jointly with a spouse), excluding the value of one's primary residence, or having an income exceeding $200,000 in each of the prior two years ($300,000 for joint income with a spouse) and a reasonable expectation of the same income level in the current year.

Quiz 4: Getting Your E-Business Off the Ground