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VC Exam (questions well answered to pass)
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VC Exam (questions well answered to pass)
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VC ExamMC - correct answer ✔✔English
Why Do LPs invest in entrepreneurial companies through GPs? (CH12)
A) Because GPs have skills that LPs don't have
B) Because LPs can invest only in exchange-traded assets
C) Because GPs have access to new ventures, unlike LPs
D) Because LPs do not have offices where start-ups are located - correct answer ✔✔english
Who are buyers (and their motivation) in a venture's secondary sale of shares? (Ch11)
A) Investors who want to buy a a low share price
B) Employees who want to cash in their stock options
Founders who want to diversity their wealth
C) The company, whch wants to buy back some of its shares - correct answer ✔✔
The exit value in the venture capital valuation method can be defined as (Ch5):
A) The value accruing to the investors at exit
B) Value of the company if it becomes successful
C) The value accruing to the founders at exit
D) The expected vale of the Company - correct answer ✔✔
The one-share-one-vote principle does not apply when (Ch8):
Shares vote by class
Company issues stock options to founders
founders participate in the board of directors
some shareholders only have observer status in the board - correct answer ✔✔
, In the context of convertible notes, the valuation cap (Ch6):
Is placed on the pre-money valuation at the next financing round
Is placed on the pre-money valuation at the time of issuing the convertible note
Is placed on the post-money valuation at the next financing round
Is placed on the post-money valuation at the time of issuing the note - correct answer ✔✔
A forward-looking split of shares among founders has the advantage (Ch4):
Of rewarding the different financial contributions by the founders
Of being more objective as the growth of the company is still to come
Of being a fairer criterion than a backward-looking split
Of providing strong incentives to contribute to the venture's success - correct answer ✔✔
In the FUEL framework, the Fundamental Structure concept looks into (Ch1):
The investor's track record
The investor's goals
The investor's governance structure
The investor's potential contribution to the venture - correct answer ✔✔
What are the costs of using markets for start-ups (Ch13)?
The loss of proprietary information
The fact that asset specificity lowers the resale price of a start-up's assets
Transaction costs, i.e., the costs of executing contracts
Transaction costs, i.e., the cost of paying outside suppliers - correct answer ✔✔
Which of the following is an important effect of market power in product markets?
It prevents the government from helping start-ups
It creates a market failure
It creates a a negative externality
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