Question 1

A ________ is a business entity that DOES NOT provide liability protection for the business owners.

Accepted Answer

Sole proprietorships and partnerships do not provide liability protection for the business owners.

Question 2

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?

Accepted Answer

The answer of For your venture project, which form of...

Question 3

In a ________, you are the single owner for the venture and you have full responsibility for the ventures operations

Accepted Answer

A Sole Proprietorship is the only option provided in the given choices where you are the single owner and have complete responsibility for the venture's operations.

Question 4

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?

Accepted Answer

The answer of Why do many entrepreneurs prefer an LLC...

Question 5

What is the downside of the C Corporation?

Accepted Answer

The downside of the C Corporation is double taxation for shareholders, as profits are taxed at the corporate level and then again as dividends to shareholders.

Question 6

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.

Accepted Answer

A C Corporation is the best choice because it allows for different classes of stock to be created, which is important for VC's to have preferential rights and preferences over other equity holders. S Corporations and LLCs do not have the flexibility to issue different classes of stock. Sole proprietorships cannot issue stock at all as they are not legal entities separate from their owners.

Question 7

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?

Accepted Answer

The answer of For your venture, what are the key...

Question 8

According to the text, which 3 skill sets are needed on a founding team?

Accepted Answer

Sales & Marketing, R&D, and Running a business or operation are essential skill sets for a founding team to cover the critical areas of product development, market engagement, and operational management.

Quiz 10: Organizing the Venture Team