MAN 320F - Test 3_FINAL with complete solutions 2024_2025
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Course
MAN 320F
Institution
MAN 320F
Start up companies usually
FAIL
What are the 3 top sources of start up funding?
Venture Capital, State Funds, Angel Investors
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What is the "napkin idea" stag...
MAN 320F - Test 3/FINAL with complete
solutions 2024/2025
Start up companies usually - ANSWER- FAIL
What are the 3 top sources of start up funding? - ANSWER- Venture Capital, State
Funds, Angel Investors
What is the "napkin idea" stage of investment? - ANSWER- This means that it is
the earliest stage of investment possible, the seed stage
The early stage of investment means that - ANSWER- 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? - ANSWER- -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? -
ANSWER- 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? -
ANSWER- 57% of the time
What is an important idea about investment? - ANSWER- its not what you start
with, its what you end with
What is the track record in investments? - ANSWER- 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? - ANSWER- -pension funds
-insurance companies
-endowments
-foundations
-high net worth individuals
What are equity investments made to fund? - ANSWER- Equity investments are
made to fund the launch, early development, or expansion of a young company
Offsetting the high risk, investors _____ - ANSWER- have the expectation of
higher than average return on investment
Who will venture capitalist fund? - ANSWER- an entrepreneur
An entrepreneur is someone who - ANSWER- assumes the financial risk of
beginning and managing a new business
What does a "perfect" investment opportunity look like? - ANSWER- -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 - ANSWER- exist
What are the 3 laws of business? - ANSWER- 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? - ANSWER- MARKET
OPPORTUNITY
How do you find the right venture capital?? - ANSWER- -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? - ANSWER- -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 - ANSWER- sold
What do you do to "get the check"? - ANSWER- -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? - ANSWER- Take their
money, follow their rules
Things to know about VC - ANSWER- -when you make a promise, they will hold
you to it and penalties will be stiff
-Most VC's want to make at least 10X their money
-As an entrepreneur remember that the name of the game is not what you start
with but what you end with
-VC's will not make emotional decisions (look at the first bullet)
You can lose your money only once but can make it a thousand times
What is the worst thing to happen if you fail in an investment? - ANSWER-
bankruptcy
What are the 6 mistakes negotiators make - ANSWER- 1) Neglecting the other
side's problem
2) letting price bulldoze other interests
3) letting positions drive out interests
4) Searching too hard for common ground
5) Neglecting BATNA (best alternative to a negotiated agreement)
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