ENFB 4190 Exam 2 with complete
solutions
Angel investors must have a net worth of what (to become accredited)? - Correct
Answers -a million dollars (and that doesn't count your house) OR 200K income over
past two years OR 300K combined house income
*SEED*
Amount?
Source?
Stage?
MNGT Team?
Valuation? - Correct Answers -1. $15-500K
2. Friends, Family, Founders, Fools, Accelerator Program
3. Feasibility Study
4. Founder
5. <$1M
*Series A*
Amount?
Source?
Stage?
MNGT Team?
Valuation? - Correct Answers -1. $500K-4M
2. Angels
3. Pre/Post-revenue
4. Partial Team
5. $1M-10M
*Series B*
Amount?
Source?
Stage?
MNGT Team?
Valuation? - Correct Answers -1. $4-10M+
2. Angels/Venture Captitalists
3. Post-Revenue
4. Complete Team
5. $10M-50M+
, What is the main thing to know about ratchet anti-dilution? - Correct Answers -It *never*
dilutes
What are *drag along rights*? - Correct Answers -If 50.1% of stock votes in favor, than
they can "drag" the people who don't want to deal. This is VERY USEFUL
What are some examples of financials that stockholders can use *information rights* to
get as hold of? - Correct Answers -Things like: Balance sheet, income statements. NOT
ALL states allow this, but most do
What are information rights? - Correct Answers -Basically, a way from stock holders to
get financial info on company. Common in most states. This stays *unaudited until
Series B* and costs a lot of money
What is D+O insurance? What does it do? Who pays for this? What does it cover/not
cover? - Correct Answers -Directors and Officers Insurance (liability). *This protects the
D+O from stockholder lawsuits*. The company buys and pays for this. Covers
everything but criminal acts that are intentional - provides for defense/coverage.
What is the main thing to know about weighted average anti-dilution? - Correct Answers
-It only applies in the *down rounds*. This means that if a company's valuation
decreases after an investor invests, it only affects their stock by the $ of the valuation
when they invested
What is the main thing to know about *broad* anti-dilution? - Correct Answers -Applies
to ALL common stock equivalents
What is the main thing to know about *Narrow* anti-dilution? - Correct Answers -
EXCLUDES options and warrants
Who is *right of first offering* good for? - Correct Answers -It is good for BOTH sides!
What does the SEC require when it comes to angel investors - Correct Answers -
accredited investors
What % of angel investors are current or former entrepreneurs? - Correct Answers -
60%
What % of angel investors are female/male - Correct Answers -20% female, 80% male
What is the average age of angel investors? - Correct Answers -53 years old
How much is being invested through angel investors each year? - Correct Answers -23
billion a year
solutions
Angel investors must have a net worth of what (to become accredited)? - Correct
Answers -a million dollars (and that doesn't count your house) OR 200K income over
past two years OR 300K combined house income
*SEED*
Amount?
Source?
Stage?
MNGT Team?
Valuation? - Correct Answers -1. $15-500K
2. Friends, Family, Founders, Fools, Accelerator Program
3. Feasibility Study
4. Founder
5. <$1M
*Series A*
Amount?
Source?
Stage?
MNGT Team?
Valuation? - Correct Answers -1. $500K-4M
2. Angels
3. Pre/Post-revenue
4. Partial Team
5. $1M-10M
*Series B*
Amount?
Source?
Stage?
MNGT Team?
Valuation? - Correct Answers -1. $4-10M+
2. Angels/Venture Captitalists
3. Post-Revenue
4. Complete Team
5. $10M-50M+
, What is the main thing to know about ratchet anti-dilution? - Correct Answers -It *never*
dilutes
What are *drag along rights*? - Correct Answers -If 50.1% of stock votes in favor, than
they can "drag" the people who don't want to deal. This is VERY USEFUL
What are some examples of financials that stockholders can use *information rights* to
get as hold of? - Correct Answers -Things like: Balance sheet, income statements. NOT
ALL states allow this, but most do
What are information rights? - Correct Answers -Basically, a way from stock holders to
get financial info on company. Common in most states. This stays *unaudited until
Series B* and costs a lot of money
What is D+O insurance? What does it do? Who pays for this? What does it cover/not
cover? - Correct Answers -Directors and Officers Insurance (liability). *This protects the
D+O from stockholder lawsuits*. The company buys and pays for this. Covers
everything but criminal acts that are intentional - provides for defense/coverage.
What is the main thing to know about weighted average anti-dilution? - Correct Answers
-It only applies in the *down rounds*. This means that if a company's valuation
decreases after an investor invests, it only affects their stock by the $ of the valuation
when they invested
What is the main thing to know about *broad* anti-dilution? - Correct Answers -Applies
to ALL common stock equivalents
What is the main thing to know about *Narrow* anti-dilution? - Correct Answers -
EXCLUDES options and warrants
Who is *right of first offering* good for? - Correct Answers -It is good for BOTH sides!
What does the SEC require when it comes to angel investors - Correct Answers -
accredited investors
What % of angel investors are current or former entrepreneurs? - Correct Answers -
60%
What % of angel investors are female/male - Correct Answers -20% female, 80% male
What is the average age of angel investors? - Correct Answers -53 years old
How much is being invested through angel investors each year? - Correct Answers -23
billion a year
