Question 1

Which of the following is a well-known investment club of high-tech entrepreneurs and retired executives?

Accepted Answer

Band of Angels is a well-known investment club composed of high-tech entrepreneurs and retired executives who invest in and mentor startup companies.

Question 2

An angel investor is likely to:

Accepted Answer

The answer of An angel investor is likely to:
...

Question 3

Which of the following organizations focuses on matching entrepreneurs with angel investors?

Accepted Answer

Active Capital is specifically designed to connect entrepreneurs with angel investors, providing early-stage startups with the necessary capital to grow.

Question 4

Which of the following investor groups often provides not only the first significant startup funds for a new business but also useful business experience and advice.

Accepted Answer

Angel investors are known for providing not only initial funding to startups but also valuable business experience and advice, helping new businesses navigate early challenges.

Question 5

A professional investment firm that provides startup funds generally in exchange for a large equity position in a new business is a(n):

Accepted Answer

Venture capitalist firms are professional investment companies that provide significant startup funds to new businesses, typically in exchange for equity positions. Unlike angel investors, who are individuals investing their own money, venture capitalists are organized firms investing pooled money from various sources.

Question 6

VC firms raise hundreds of millions of dollars in funding for new businesses from sources such as:

Accepted Answer

VC firms typically raise large amounts of capital from institutional investors like endowments, insurance companies, and pension funds, which have the capacity to invest significant sums of money.

Question 7

Some high-tech companies invest in technology startups as a way to:

Accepted Answer

High-tech companies often invest in technology startups to extend their own research and development interests, as it allows them to access new innovations and technologies that align with their strategic goals.

Question 8

When seeking VC funding, an entrepreneur should:

Accepted Answer

VC firms are more likely to invest in startups that align with their investment strategy and areas of interest, making it crucial for entrepreneurs to research and target firms that match their business idea. Unsolicited business plans and direct calls to high-ranking officials are generally not effective strategies.

Question 9

A pitch document:

Accepted Answer

A pitch document is primarily used to highlight a market need and briefly explain how a new business can profitability exploit that need, aiming to attract interest and investment.

Question 10

A pitch to potential investors should:

Accepted Answer

A comprehensive pitch to potential investors should include defining the business's products and services, identifying major competitors, and illustrating planned exit strategies to give a full picture of the business plan and its market context.

Question 11

A quick one- or two-minute explanation of a new e-business idea is often called a(n):

Accepted Answer

An elevator pitch is a brief, persuasive speech that you use to spark interest in what your organization does or in a project, idea, or product. It's called an "elevator pitch" because it should be concise enough to present during a short elevator ride.

Question 12

A list of the major terms or conditions of an investor's proposed financing arrangement is called a(n):

Accepted Answer

A term sheet outlines the major terms and conditions of a proposed investment agreement. It is a non-binding agreement setting forth the basic terms and conditions under which an investment will be made.

Question 13

The average startup business remains in a business incubator's portfolio for approximately:

Accepted Answer

The average startup business typically remains in a business incubator's portfolio for approximately three years. This time frame allows startups to develop their business model, gain access to mentorship and resources, and become financially viable.

Question 14

Commercial business incubators who, during the dot.com boom of the late 1990s, focused on developing e-business startups that could be spun out on their own within three to twelve months were sometimes called:

Accepted Answer

Internet accelerators were specifically designed to support and expedite the growth of internet-based startups during the dot.com boom, aiming to prepare them for independence in a short timeframe.

Question 15

_______________investors include friends, family members, and angel investors.

Accepted Answer

The answer of _______________investors include friends, family members, and angel...

Question 16

A(n)_______________of tapping a friends and family network for startup money is that friends and family know and trust the entrepreneur.

Accepted Answer

The answer of A(n)_______________of tapping a friends and family network...

Question 17

The term_______________investor originally meant a wealthy investor who swooped down and saved a Broadway theatrical production when it was in financial trouble.

Accepted Answer

The answer of The term_______________investor originally meant a wealthy investor...

Question 18

Before accepting startup funds from friends and family members, an entrepreneur should make certain they understand that a startup venture is a(n)_______________proposition.

Accepted Answer

The answer of Before accepting startup funds from friends and...

Question 19

When soliciting startup funds, an entrepreneur should provide the same_______________to a family member or friend that he or she would provide to any potential investor.

Accepted Answer

The answer of When soliciting startup funds, an entrepreneur should...

Question 20

_______________from a network of friends and family members is a great way to obtain enough money to get a new business started.

Accepted Answer

The answer of _______________from a network of friends and family...

Quiz 4: Getting Your E-Business Off the Ground