Equity Financing and Fundraising Quiz
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Questions and Answers

Which type of financing depends on an entrepreneur's tolerance of risk?

  • Equity financing
  • Debt financing
  • Financing from investors (correct)
  • Financing from family and friends

    • What is the idea behind equity financing?

  • To avoid investment as long as possible
  • To enhance growth and share part of the pie (correct)
  • To preserve equity as much as possible
  • To own 100% of a small pie

    • What is the general rule for balancing growth and preserving equity?

  • Give up less equity to investors
  • Maintain 100% ownership of the company
  • Avoid investment as long as possible (correct)
  • Seek investment as early as possible

    • What risk do entrepreneurs face when financing from family and friends?

    <p>Ruining meaningful relationships</p> Signup and view all the answers

    What risk do entrepreneurs face when financing from investors?

    <p>Eroding company culture</p> Signup and view all the answers

    What do entrepreneurs risk more than financial investments?

    <p>Personal relationships</p> Signup and view all the answers

    According to a study of 212 U.S. startups, what percentage of founders were no longer CEO after 3 years?

    <p>50%</p> Signup and view all the answers

    Who was fired by Apple's board of directors?

    <p>Steve Jobs</p> Signup and view all the answers

    What tends to happen to companies whose founders give up a bigger slice of equity to investors?

    <p>They become more valuable</p> Signup and view all the answers

    What analogy does the text use to explain the concept of equity?

    <p>Splitting a pie</p> Signup and view all the answers

    Which type of financing risks ruining meaningful relationships?

    <p>Financing from family and friends</p> Signup and view all the answers

    What is the potential risk of financing from investors?

    <p>Eroding entrepreneur's vision</p> Signup and view all the answers

    What is the trade-off when entrepreneurs give up a bigger slice of equity to investors?

    <p>Risk of losing position of CEO</p> Signup and view all the answers

    What did a study of 212 U.S. startups show about founders who give up a bigger slice of equity to investors?

    <p>They tend to build less valuable companies</p> Signup and view all the answers

    What does equity financing involve?

    <p>Selling shares and stock in exchange for cash</p> Signup and view all the answers

    What is the general rule for balancing growth and preserving equity?

    <p>Avoid investment as long as possible</p> Signup and view all the answers

    What analogy does the text use to explain the concept of equity?

    <p>Splitting a pie</p> Signup and view all the answers

    What does financing from family and friends risk besides ruining meaningful relationships?

    <p>Risking personal relationships</p> Signup and view all the answers

    What does financing from investors risk besides eroding the entrepreneur's vision?

    <p>Ruining company culture</p> Signup and view all the answers

    Who was fired by Apple's board of directors?

    <p>Steve Jobs</p> Signup and view all the answers

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