Module 9 Flashcards
Definition: markets providing debt and equity to nonsecure financing situations.
Risk capital markets
What is not a type of risk capital markets?
a. Information (business angels)
b. Venture capital (VC)
c. Private equity (PE)
d. Public equity (PE)
c.
Types of funding:
1. Seed funding
2. Early-/expensive stage funding
3. Development financing
4. Exits
a. Venture capital
b. Business angels
c. Trade sales and IPO
d. Private equity
1.b
2.a.
3.d.
4.c.
Definition: consists of a virtually invisible groupe of wealthy investors (business angels). Provides funding, especially in start-up financing (seed funding). Contains the largest pool of risk capital.
Informal risk capital
True or false. It is easy to get money for something related to social environment.
False. It is difficult.
Place in order the % of venture by industry sector.
a. Internet
b. Telecommunication
c. Software
d. Health care services
- Internet (38%)
- Health care services (18%)
- Telecommunication (11%)
- Software (7%)
What is the objective of a venture-capital firm?
Generation of long-term capital appreciation through debt and equity investments
Which one is not a criteria for commiting to venture?
a. Strong management team
b. Strong social media presence
c. Unique product / market opportunity
d. Business opportunity that shows significant capital appreciation
b.
What are the % of return on investments (ROI) associated to each risk and returns criteria?
a. Development financing
b. Early stage
c. Aquisitions and leverage buyouts
a. 40% ROI
b. 50% ROI
c. 30% ROI
Risk and return criteria:
1. Highest risk
2. Lowest risk
a. Lowest return expected
b. Highest return expected
1.b.
2.a.
True or false. There is a negative correlation between the risks and the expected returns.
False. It is a positive correlation.
Place in order the venture capital process stages.
a. Agreement on principal terms between entrepreneur and venture capitalist.
b. Final approval - documentaiton on final terms of the deal.
c. Preliminary screening is an initial evaluation of a deal - begins with the receipts of the business plan.
d. Due diligence - stage of deal evaluation.
c.a.d.b.
Which stage is the most difficult?
a. Agreement on principal terms between entrepreneur and venture capitalist.
b. Final approval - documentaiton on final terms of the deal.
c. Preliminary screening is an initial evaluation of a deal - begins with the receipts of the business plan.
d. Due diligence - stage of deal evaluation.
b.
Investors want to earn money as soon as possible.
Entrepreneurs want to earn money on the long term.
What do impact investors desire for?
Social or environmental results. They aim at changing the environment or changing the social structure to make it more social.
True or false. Competitive returns are those who are above concessionary returns.
True.
