Fin 328 Entrepreneurial Finance Midterm Acquiring Capital (Readings, Lecture Slides, And Course Guides) Updated Questions And Correct Answers

FIN 328 ENTREPRENEURIAL FINANCE MIDTERM ACQUIRING
CAPITAL (READINGS, LECTURE SLIDES, AND COURSE
GUIDES) UPDATED QUESTIONS AND CORRECT ANSWERS
Question:
1. Define the purpose of En-trepreneurial Finance
Answer:
The ultimate goal of EF is to ALLOCATE capital to young, disruptive, and growth oriented
companies that are focused on innovative products and services

Question:
2. What 6 aspects of EF define its scope?
Answer:
1. Raising Capital
- Strategies for attracting funding across different stages and
sources
2. Valuation
- Methods for determining worth of early-stage companies with
limited history
3. Risk Management
- Mitigating threats to survival while pursuing growth
4. Financial Modeling
- Projecting growth path and resource needs under uncertainty
5. Strategic Decisions
- Resource allocation and pivots based on market feedback
6. Exit Strategies
- Planning liquidity events that reward founders and investors

Question:
3. Who are the three main players of the startup ecosystem?
Answer:
The Entrepreneur, visionary who identifies market opportunities and builds the solution The Investor,
provides capital to fuel growth while offering exper-tise, networks and mentorship -Angels, VC,
stategics The Lawyer, navigates legal complexities around entity formation, intellectual property,
contracts, and funding compliance

Question:
4. What are 3 main chal-lenges for Entrepreneurs and Investors looking to source/provide capital?
Answer:
E:
1. Securing funding is competitive
2. All investors have differing preferences, requirements, and meth-
ods
3. Limited access to decision-makers IF "E" has no strong network
INV:
1. Overwhelming number of proposals, majority unsuitable for
investment

, 2. Time-intensive due diligence is required for potential invest-
ments
3. 7-10 years before returns materialize

Question:
5. Describe one benefit of EF to each of the following parties:
Entrepreneur Investor Society
Answer:
E: Right investors add strategic value beyond capital I: Potential for outsized returns and portfolio
diversification S: Market-driven innovation and job creation

Question:
6. What are the Entrepre-neur's 4 KEY financial chal-lenges?
Answer:
1. Personal Financial transition
- When do I quit my job?
2. Securing Initial Capital
- How do I fund my vision?
3. Capital Stewardship
- How do I make it last?
4. Growth Financing?
- How do I fund expansion?

Question:
7. What are the characteris-tics of a company going through the: Pre-seed & Seed Stage
Answer:
This companies have a pre-revenue focus on product development. Have a high risk, and high reward.
Their investors typically consist of friends and family, angel in-vestors, and pre seed funds They
mostly use their funds in MVP development

Question:
8. What is the scaling focus of... Series A funding Series B funding Series C funding
Answer:
Series A: Product-market fit, repeatable sales model Series B: Scaling operations, market expansion
Series C+: Dominance, profitability, new markets

Question:
9. What is meant by MVP?
Answer:
Minimum Viable Product, which is the most basic version of a new product with just enough features
to be released to early customers. The purpose of an MVP is to validate a product idea and gather
feedback from real users with the least amount of effort and investment.

Question:
10. Define the concept of dilu-tion and how smart entre-preneurs use it to their ad-vantage