ENFB 4190 Exam 2 with complete
solutions
What is king in early-stage company finance? - Correct Answers -Cash is king
What is queen in early-stage company finance? - Correct Answers -Cash flow is queen
Two financial questions? - Correct Answers -1. How much cash do you have?
2. When does it run out?
How long does the average start-up lose money for? - Correct Answers -At least 18
months
When taking investments, what's a good rule? - Correct Answers -Take more money
than less money
What is "Burn rate"? - Correct Answers -Another word for negative cash flow (Out of
cash date)
Should you under or over-perform your budget? - Correct Answers -Underperform
What is the minimum amount of time to close a round of equity? - Correct Answers -6
months
How much cumulative negative cash flow do you need to raise? - Correct Answers -A
minimum of 12-18 months of cumulative negative cash flow x 1.5
Give the five details of the Seed stage of funding. - Correct Answers -1. Stage: R&D
(Feasibility Study)
2. Amount: $15k - $500k
3. Sources: Friends, Family, Fools, and Founders / Start-up accelerators
4. Mgt. Team: Founder(s)
5. Pre-Money Valuation: Up to $1M
Give the five details of the Series "A" stage of funding. - Correct Answers -1. Stage:
Launch/Early (Business Plan); Pre/Post Revenue
2. Amount: $500k - $4M
, 3. Sources: Angels/Angel Networks; Venture Capitalists
4. Mgt. Team: Initial Mgt. Team (Base salaries)
5. Pre-Money Valuation: $1M - $15M
Give the five details of the Series "B" stage of funding. - Correct Answers -
What is an Angel Investor? - Correct Answers -Angel investors are individuals that
invest their own money in start-ups
What career have most angel investors had at one point or another? - Correct Answers
-Most are current or former entrepreneurs
What is the criteria for being an angel investor? - Correct Answers -1. Must be worth at
least $1M not including your home
2. Or, make $200,000 a year for the last 2 years filing as single
3. Or, make $300,000 a year for the last two years filing jointly with spouse
What gender is the majority of angel investors? - Correct Answers -80% are male but
that number is decreasing
What is the average age of angel investors? - Correct Answers -53 years old
What percentage of angel investors have an undergraduate degree? - Correct Answers
-99% have an undergraduate degree
What are cumulative dividends? - Correct Answers -Every year that you miss paying
dividends you eventually pay off when you have the money
What are non-cumulative dividends? - Correct Answers -Every year that you are unable
to pay dividends just goes down as a year with no dividends; you never have to pay off
a debt
What are five rules of negotiations? - Correct Answers -1. Not a battle with a winner and
a loser
2. The party across the negotiations table is not the enemy
3. Know what you want & why -- before negotiations begin
4. As early as possible in the negotiation, find out what is most important to the other
party and give it to them
5. Address the major issues first
What percentage of angel investors have an advanced college degree? - Correct
Answers -51% have an advanced college degree
How many active angel investors are there in the U.S.? - Correct Answers -300,000
What is the average investment for an angel investor? - Correct Answers -$53,000
solutions
What is king in early-stage company finance? - Correct Answers -Cash is king
What is queen in early-stage company finance? - Correct Answers -Cash flow is queen
Two financial questions? - Correct Answers -1. How much cash do you have?
2. When does it run out?
How long does the average start-up lose money for? - Correct Answers -At least 18
months
When taking investments, what's a good rule? - Correct Answers -Take more money
than less money
What is "Burn rate"? - Correct Answers -Another word for negative cash flow (Out of
cash date)
Should you under or over-perform your budget? - Correct Answers -Underperform
What is the minimum amount of time to close a round of equity? - Correct Answers -6
months
How much cumulative negative cash flow do you need to raise? - Correct Answers -A
minimum of 12-18 months of cumulative negative cash flow x 1.5
Give the five details of the Seed stage of funding. - Correct Answers -1. Stage: R&D
(Feasibility Study)
2. Amount: $15k - $500k
3. Sources: Friends, Family, Fools, and Founders / Start-up accelerators
4. Mgt. Team: Founder(s)
5. Pre-Money Valuation: Up to $1M
Give the five details of the Series "A" stage of funding. - Correct Answers -1. Stage:
Launch/Early (Business Plan); Pre/Post Revenue
2. Amount: $500k - $4M
, 3. Sources: Angels/Angel Networks; Venture Capitalists
4. Mgt. Team: Initial Mgt. Team (Base salaries)
5. Pre-Money Valuation: $1M - $15M
Give the five details of the Series "B" stage of funding. - Correct Answers -
What is an Angel Investor? - Correct Answers -Angel investors are individuals that
invest their own money in start-ups
What career have most angel investors had at one point or another? - Correct Answers
-Most are current or former entrepreneurs
What is the criteria for being an angel investor? - Correct Answers -1. Must be worth at
least $1M not including your home
2. Or, make $200,000 a year for the last 2 years filing as single
3. Or, make $300,000 a year for the last two years filing jointly with spouse
What gender is the majority of angel investors? - Correct Answers -80% are male but
that number is decreasing
What is the average age of angel investors? - Correct Answers -53 years old
What percentage of angel investors have an undergraduate degree? - Correct Answers
-99% have an undergraduate degree
What are cumulative dividends? - Correct Answers -Every year that you miss paying
dividends you eventually pay off when you have the money
What are non-cumulative dividends? - Correct Answers -Every year that you are unable
to pay dividends just goes down as a year with no dividends; you never have to pay off
a debt
What are five rules of negotiations? - Correct Answers -1. Not a battle with a winner and
a loser
2. The party across the negotiations table is not the enemy
3. Know what you want & why -- before negotiations begin
4. As early as possible in the negotiation, find out what is most important to the other
party and give it to them
5. Address the major issues first
What percentage of angel investors have an advanced college degree? - Correct
Answers -51% have an advanced college degree
How many active angel investors are there in the U.S.? - Correct Answers -300,000
What is the average investment for an angel investor? - Correct Answers -$53,000
