Test Bank Ch.9 Early Stage Funding 4th Edition

Chapter 9: Early Stage Funding

True / False

1. A garage start-up is a myth in today’s world.
2. Credit cards can be used as a source of funding for a new adventure.
3. Outsourcing is a bootstrapping technique.
4. Angle investors are the key to successful bootstrapping by entrepreneurs.
5. The best angels are those that can bring contacts, experience, and long-term financing.
6. Micro-loans were introduced initially in 1976.
7. With Micro-loans you must provide personal guarantees.
8. STTR program stands for Student Business Technology Transfer.
9. Most states have programs that provide financial assistance or incentives to small businesses.
10. Unfortunately, a single company cannot be awarded more than one SBIR grant simultaneously.

Short Answer / Fill in the blank

1. ___________ are a very popular source for start-up capital because they are not as worried about quick profits.
2. ________ investors invest their own money.
3. Angels are always looking for new deal opportunities, called __________.
4. The average number of members in an angel group is ____________.
5. Bootstrapping is a type of __________.
6. Having a source of __________ income while a company is getting started improves the chances of success.
7. In some cases, entrepreneurs use _________ from previous endeavors to invest in their new enterprises.
8. ________ is a form of financing that is usually available to entrepreneurs who are highly motivated and committed to using personal resources to launch a venture.
9. When considering self-funding, carefully secede how much financial ________ you are willing to take.

Multiple Choice

1. Virtual companies are sometimes referred to as:
   1. Micro-Equity.
   2. Lean start-ups.
   3. Bootstrapping.
   4. Angels.
2. Which of the following is the best source of funds for first-stage financing?
   1. Small business investment companies
   2. Public equity market
   3. Private venture capital companies
   4. Friends and family
3. Which of the following is not a bootstrapping technique?
   1. No or low rent
   2. Trading intellectual property rights
   3. Receiving angel funding
   4. Outsourcing
4. Leasing expensive equipment makes sense because:
5. You may only need the equipment for a short period.
6. It can be used as a tax write off.
7. You don’t ever have to give the equipment back.
8. It never makes sense.
9. Contingent Litigation is:
10. Sharing the proceeds of litigation with your attorney in exchange for fees.
11. Going to court as a last resort.
12. Settling a case out of court.
13. Only filing a lawsuit if your partner agrees with you.
14. The estimated total invested per year by angels in the US is:
15. $ 6 billion.
16. $ 54 billion.
17. $ 81 billion.
18. $490 billion.
19. When inventory is the asset base for a loan:
20. A trust receipt may be used.
21. Factoring may be arranged.
22. None of it can be financed.
23. The inventory cannot be sold.
24. Which of the following is NOT a purpose that micro-loans may be used for?
25. Purchase of equipment
26. Purchase of Machinery
27. Working Capital
28. Weekend get-a-way
29. To ensure a reasonable expectation of repayment, bank loans are generally based on:
30. Accounts payable.
31. A percent of equity.
32. Either assets or cash flow.
33. Both A and C.
34. Typically, debt financing requires:
35. Reduction of short-term assets.
36. A degree of ownership in the firm.
37. An asset as collateral.
38. Reduction of working capital.
39. Which of the following is not federally supported sources of small company funding?
    1. The SBIR program
    2. SBA loans
    3. EPA programs
    4. The STTR program
40. In Phase Two of the Small Business Innovation Research grant program:
    1. Funds are provided for theoretical research.
    2. No direct funding is provided.
    3. Money is provided to develop prototypes.
    4. Phase one is repeated.
41. Minority-owned business is one that has ______ percent or more owned by a minority.
    1. 10
    2. 25
    3. 51
    4. 90
42. Which of the following is more suitable funding for later stage?
    1. Self-funding
    2. Personally secured bank loans
    3. IPO
    4. Government programs
43. Trading intellectual property rights is a type of:
44. Bootstrapping.
45. Part-time working.
46. Moonlighting.
47. Angel investing.
48. Which of the following is NOT a reason the SBA was created?
49. To aid the small business community
50. To protect the small business community
51. To control the small business community
52. To counsel the small business community
53. To qualify for an SBIR grant applicants must:
54. Have been in business for more than 5 years.
55. Have been in business for less than 5 years.
56. Have less than 500 employees.
57. Have more than 500 employees.
58. A company that has no offices, very few employees, and no communication costs is called:
59. Parent Company.
60. Virtual Company.
61. Corporate Company.
62. Self-funding Company.
63. Private lenders that provide funds for your operations using purchase orders as security for the loan is called:
64. Factors.
65. Micro-loans.
66. Bank Loans.
67. Angels.
68. In exchange for getting your purchase orders, suppliers may give you a(n):
69. Invoice.
70. Loan.
71. Line of credit.
72. Micro-loan.
73. Which of the following best describes Phase I of the SBIR Program?
74. A grant of up to $1 million can be awarded
75. This is not a funding stage
76. There is a two-year decline to complete this phase
77. There is a grant award of up to $150,000
78. According to the textbook, the BEST method of locating angel investors is through:
79. LinkedIn.
80. Newspaper.
81. TV ads.
82. Word of Mouth.
83. Angels are:
84. Individuals who rarely invest.
85. High-net-worth individuals that never risk their wealth.
86. High-net-worth individuals that are willing to risk their funds in start-up companies.
87. Low-net-worth individuals that risk everything on investments.
88. When family and friends are your main investors, you should:
89. Not disclose any details of your business plan.
90. Only disclose information that they ask about.
91. Disclose all information just as they are a regular investor.
92. Do not do business with family or friends.