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 (C)</p> Signup and view all the answers

What risk do entrepreneurs face when financing from investors?

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

What do entrepreneurs risk more than financial investments?

<p>Personal relationships (A)</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% (A)</p> Signup and view all the answers

Who was fired by Apple's board of directors?

<p>Steve Jobs (B)</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 (C)</p> Signup and view all the answers

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

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

Which type of financing risks ruining meaningful relationships?

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

What is the potential risk of financing from investors?

<p>Eroding entrepreneur's vision (D)</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 (B)</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 (A)</p> Signup and view all the answers

What does equity financing involve?

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

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

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

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

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

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

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

Who was fired by Apple's board of directors?

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

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