MAN 320F - Test 3/FINAL with comprehensive Questions and
Answers
Start up companies usually✔️✔️FAIL
What are the 3 top sources of start up funding?✔️✔️Venture Capital, State Funds, Angel Investors
What is the "napkin idea" stage of investment?✔️✔️This means that it is the earliest stage of
investment possible, the seed stage
The early stage of investment means that✔️✔️the early stage of investment means that it may be
early on in a company but it still be making some revenue
What is important to note about the seed/early stage?✔️✔️-this is the preferred
investment/company stage
-means invest at the very beginning
Angel investors like to invest "in their backyard", what does this mean?✔️✔️this means that they
like to invest on things that they can easily check on and have a close look at when need be
What percentage of time do investors think they are not getting a good deal?✔️✔️57% of the time
What is an important idea about investment?✔️✔️its not what you start with, its what you end
with
What is the track record in investments?✔️✔️40% of deals fail, 40% of deals do ok but nothing
great, and 20% of deals make up for the other 80% that don't do that well
Where do I get the money to invest?✔️✔️-pension funds
,-insurance companies
-endowments
-foundations
-high net worth individuals
What are equity investments made to fund?✔️✔️Equity investments are made to fund the launch,
early development, or expansion of a young company
Offsetting the high risk, investors _____✔️✔️have the expectation of higher than average return
on investment
Who will venture capitalist fund?✔️✔️an entrepreneur
An entrepreneur is someone who✔️✔️assumes the financial risk of beginning and managing a new
business
What does a "perfect" investment opportunity look like?✔️✔️-an experienced/proven management
team
-a great idea/concept that is proprietary
-something that cannot be duplicated
-a product or service that 7 billion humans will buy
-a great rate of return on investment
-intellectual property that is protected by patents or trademarks
A perfect investment does not✔️✔️exist
What are the 3 laws of business?✔️✔️1- it will always cost more than you thought it would
2- It will always take longer than you anticipated
3- things change continuously
, What really matters in business and investment?✔️✔️MARKET OPPORTUNITY
How do you find the right venture capital??✔️✔️-need to talk to allied professionals such as
lawyers, accountants, and entrepreneurs (its not just what you know but WHO you know)
-find the venture capitalist who have invested or specialized in your industry
-many large corporations have dedicated VC funds to invest in companies strategic to their core
business
What do we need to prepare for the VC?✔️✔️-an honest business plan with risks, challenges,
opportunities, and issues
-what key members you need to hire and where they will come from
-clear strategic goals and what you plan on doing to achieve those goals
-potential customers
-a path towards liquidity
companies are bought, NOT✔️✔️sold
What do you do to "get the check"?✔️✔️-competitive deals get funded because VC's don't want to
miss out on what their colleagues view as a great bet
-probably giving up majority of the stock
-follow their advice (golden rule)
-By the time of IPO (initial public offering/they can sell their stock to the public now) founders
own 20%
-Be ready for the fast lane
What is the golden rule when it comes to investors?✔️✔️Take their money, follow their rules
Things to know about VC✔️✔️-when you make a promise, they will hold you to it and penalties
will be stiff
Answers
Start up companies usually✔️✔️FAIL
What are the 3 top sources of start up funding?✔️✔️Venture Capital, State Funds, Angel Investors
What is the "napkin idea" stage of investment?✔️✔️This means that it is the earliest stage of
investment possible, the seed stage
The early stage of investment means that✔️✔️the early stage of investment means that it may be
early on in a company but it still be making some revenue
What is important to note about the seed/early stage?✔️✔️-this is the preferred
investment/company stage
-means invest at the very beginning
Angel investors like to invest "in their backyard", what does this mean?✔️✔️this means that they
like to invest on things that they can easily check on and have a close look at when need be
What percentage of time do investors think they are not getting a good deal?✔️✔️57% of the time
What is an important idea about investment?✔️✔️its not what you start with, its what you end
with
What is the track record in investments?✔️✔️40% of deals fail, 40% of deals do ok but nothing
great, and 20% of deals make up for the other 80% that don't do that well
Where do I get the money to invest?✔️✔️-pension funds
,-insurance companies
-endowments
-foundations
-high net worth individuals
What are equity investments made to fund?✔️✔️Equity investments are made to fund the launch,
early development, or expansion of a young company
Offsetting the high risk, investors _____✔️✔️have the expectation of higher than average return
on investment
Who will venture capitalist fund?✔️✔️an entrepreneur
An entrepreneur is someone who✔️✔️assumes the financial risk of beginning and managing a new
business
What does a "perfect" investment opportunity look like?✔️✔️-an experienced/proven management
team
-a great idea/concept that is proprietary
-something that cannot be duplicated
-a product or service that 7 billion humans will buy
-a great rate of return on investment
-intellectual property that is protected by patents or trademarks
A perfect investment does not✔️✔️exist
What are the 3 laws of business?✔️✔️1- it will always cost more than you thought it would
2- It will always take longer than you anticipated
3- things change continuously
, What really matters in business and investment?✔️✔️MARKET OPPORTUNITY
How do you find the right venture capital??✔️✔️-need to talk to allied professionals such as
lawyers, accountants, and entrepreneurs (its not just what you know but WHO you know)
-find the venture capitalist who have invested or specialized in your industry
-many large corporations have dedicated VC funds to invest in companies strategic to their core
business
What do we need to prepare for the VC?✔️✔️-an honest business plan with risks, challenges,
opportunities, and issues
-what key members you need to hire and where they will come from
-clear strategic goals and what you plan on doing to achieve those goals
-potential customers
-a path towards liquidity
companies are bought, NOT✔️✔️sold
What do you do to "get the check"?✔️✔️-competitive deals get funded because VC's don't want to
miss out on what their colleagues view as a great bet
-probably giving up majority of the stock
-follow their advice (golden rule)
-By the time of IPO (initial public offering/they can sell their stock to the public now) founders
own 20%
-Be ready for the fast lane
What is the golden rule when it comes to investors?✔️✔️Take their money, follow their rules
Things to know about VC✔️✔️-when you make a promise, they will hold you to it and penalties
will be stiff
