FINTECH QUIZ 1 QUESTIONS WITH DETAILED VERIFIED
AND 100% ACCURATE ANSWERS
Entrepreneurship Correct Answers Identifying opportunities to disrupt,
new ideas, putting pieces together, making change
Finance Correct Answers Allocating capital, intermediation process
Entrepreneurial finance Correct Answers How do we allocate capital to
entrepreneurs
Startup characteristics Correct Answers Need to grow rapidly because of
network effects and scale economies/first-mover advantage
Startups vs. small businesses Correct Answers Young, risky (slim
chance of success), fast-growing, unprofitable, few capital/physical
assets, value of firm tied to specific human capital
Types of information friction Correct Answers Search friction,
information asymmetry
3 information frictions Correct Answers Sourcing, diligence, monitoring
Search frictions Correct Answers Little public info available about
startups
,Information asymmetry Correct Answers Entrepreneur typically knows
more than investor about quality of startup
Sourcing Correct Answers Search friction, where do I find a deal?
Diligence Correct Answers Information asymmetry, is this a scam?
Monitoring Correct Answers Information asymmetry, is the entrepreneur
doing what he said he would?
Implications of information frictions for startup investing (sourcing)
Correct Answers Personal networks matter a lot
Implications of information frictions for startup investing (diligence)
Correct Answers Should share risk and diligence cost through
syndication
Implications of information frictions for startup investing (monitoring)
Correct Answers Investors have control rights (board seats)
Implications of information frictions for startup investing
(diligence/monitoring) Correct Answers Investments tend to be local,
require face-to-face and frequent interaction
Implications of information frictions for transactions Correct Answers
Investment deal negotiations are bilateral, one-off (bespoke/customized),
, high transaction costs (i.e. lawyer fee) so investments are typically
lumpy (large/over $100k)
Angel/VC investors balance 3 goals Correct Answers Diversification
across investments, scale in each investment, management/transaction
costs
Typical startup timeline Correct Answers Identify opportunity, acquire
resources, execute business plan, harvest success
What matters most to VCs Correct Answers Terminal share that the
investor owns, company performance, capital markets at exit
General facts about VC Correct Answers Low barriers to entry but small
group of top-tier firms get best deals, tend to herd into hot sectors,
cyclical returns but sticky outflows
Fintech Correct Answers Catch-all term for techs/startups trying to
disrupt financial services through disintermediation (P2P, ICOs) or
doing something incumbents do better and cheaper (mobile banking)
Why are fintechs disrupting now? Correct Answers Changing IT/AI/data
tech: larger network effects, lower startup costs, blockchain technology
(maybe)
Low interest rates (important because startups need capital pools aka
debt)
AND 100% ACCURATE ANSWERS
Entrepreneurship Correct Answers Identifying opportunities to disrupt,
new ideas, putting pieces together, making change
Finance Correct Answers Allocating capital, intermediation process
Entrepreneurial finance Correct Answers How do we allocate capital to
entrepreneurs
Startup characteristics Correct Answers Need to grow rapidly because of
network effects and scale economies/first-mover advantage
Startups vs. small businesses Correct Answers Young, risky (slim
chance of success), fast-growing, unprofitable, few capital/physical
assets, value of firm tied to specific human capital
Types of information friction Correct Answers Search friction,
information asymmetry
3 information frictions Correct Answers Sourcing, diligence, monitoring
Search frictions Correct Answers Little public info available about
startups
,Information asymmetry Correct Answers Entrepreneur typically knows
more than investor about quality of startup
Sourcing Correct Answers Search friction, where do I find a deal?
Diligence Correct Answers Information asymmetry, is this a scam?
Monitoring Correct Answers Information asymmetry, is the entrepreneur
doing what he said he would?
Implications of information frictions for startup investing (sourcing)
Correct Answers Personal networks matter a lot
Implications of information frictions for startup investing (diligence)
Correct Answers Should share risk and diligence cost through
syndication
Implications of information frictions for startup investing (monitoring)
Correct Answers Investors have control rights (board seats)
Implications of information frictions for startup investing
(diligence/monitoring) Correct Answers Investments tend to be local,
require face-to-face and frequent interaction
Implications of information frictions for transactions Correct Answers
Investment deal negotiations are bilateral, one-off (bespoke/customized),
, high transaction costs (i.e. lawyer fee) so investments are typically
lumpy (large/over $100k)
Angel/VC investors balance 3 goals Correct Answers Diversification
across investments, scale in each investment, management/transaction
costs
Typical startup timeline Correct Answers Identify opportunity, acquire
resources, execute business plan, harvest success
What matters most to VCs Correct Answers Terminal share that the
investor owns, company performance, capital markets at exit
General facts about VC Correct Answers Low barriers to entry but small
group of top-tier firms get best deals, tend to herd into hot sectors,
cyclical returns but sticky outflows
Fintech Correct Answers Catch-all term for techs/startups trying to
disrupt financial services through disintermediation (P2P, ICOs) or
doing something incumbents do better and cheaper (mobile banking)
Why are fintechs disrupting now? Correct Answers Changing IT/AI/data
tech: larger network effects, lower startup costs, blockchain technology
(maybe)
Low interest rates (important because startups need capital pools aka
debt)
