Semifinals

Question 1

Entrepreneurial finance differs from corporate finance for EGCs in four significant ways

Answer 1

Rapid Growth and cash consumption
Intangible Assets
High risk and High Reward
Talent Retention

Question 2

requires substantial investments in
fixed assets and working capital

Answer 2

Rapid growth and cash consumption

Question 3

Many EGCs possess valuable intellectual property rights, like patents, which are challenging to finance externally.

Answer 3

Intangible Assets

Question 4

This growth consumes more cash than they generate, necessitating external financing.

Answer 4

Rapid Growth and Cash Consumption

Question 5

EGCs often work with untested technologies, leading to both high failure risks and potential high rewards

Answer 5

High Risk and High Reward

Question 6

EGCs must attract and retain highly skilled talent while minimizing cash outflow, often utilizing stock-option grants for compensation.

Answer 6

Talent Retention

Question 7

The distinctive features of entrepreneurial
finance are:

Answer 7

Heavy reliance on Equity Financing
Information Problems in Financial Contracting
External Equity Financing
Private Equity
Initial Sources of Financing

Question 8

EGCs rely heavily on equity financing due to the difficulty of financing growth opportunities with borrowed money.

Answer 8

Heavy Reliance on Equity Financing

Question 9

Financial contracts between EGCs and financiers are complex and riddled with information problems.

Answer 9

Information problems in Financial Contracting

Question 10

EGCs must seek _______
because their investments far exceed their internal funding
capabilities.

Answer 10

External Equity Financing:

Question 11

Privately held EGCs commonly depend on _______, including capital investments by owners and funding
from venture capitalists.

Answer 11

Private Equity

Question 12

Many EGCs initially rely on personal equity
financing and loans from financial institutions, with personal
guarantees often involved.

Answer 12

Initial sources of financing

Question 13

is a professionally managed fund raised to invest in rapidly growing private companies, often involved in bringing new scientific discoveries to market.

Answer 13

Venture Capital

Question 14

Types of Venture Capital Funds

Answer 14

Institutional venture capital funds
angel capitalists

Question 15

are formal entities with full-time professionals seeking and funding promising ventures

Answer 15

Institutional venture capital funds

Question 16

are wealthy individuals making private-equity investments more informally.

Answer 16

angel capitalists

Question 17

play a significant role, often rivaling venture capitalists in total equity investment to U.S. private businesses.

Answer 17

Angel Capitalists

Question 18

four categories of institutional venture capital funds

Answer 18

Small Business Investment
Companies
Financial Venture Capital Funds
Corporate Venture Capital Funds
Venture Capital Limited Partnerships

Question 19

Federally chartered corporations established under the Small Business Administration Act of 1958.

Answer 19

Small business Investment Companies

Question 20

They have the ability to borrow from the U.S. Treasury, raise equity capital from the Treasury in the form of preferred equity interests, and can organize as limited partnerships.

Answer 20

Small business investment Companies

Question 21

Subsidiaries of financial institutions, particularly commercial banks

Answer 21

Financial Venture Capital Funds

Question 22

They nurture companies that may become profitable customers of the parent organization.

Answer 22

Financial Venture Capital Funds

Question 23

Leverage the financial expertise and contacts of the corporate staff.

Answer 23

Financial Venture Capital Funds

Question 24

Established by nonfinancial corporations aiming to gain access to emerging technologies.

Answer 24

Corporate Venture Capital Funds

Question 25

Make earlystage investments in high-tech firms to stay competitive

Answer 25

Corporate Venture Capital Funds

Question 26

Established by professional Venture Capital Firms and serve as general partners

Answer 26

Venture Capital
Limited Partnerships

Question 27

Handle investing, managing, and ultimately liquidating assets.

Answer 27

Venture Capital Limited partnerships

Question 28

are the dominant
players in the venture capital industry.

Answer 28

Limited Partnerships

Question 29

control the majority of
industry resources, and their influence in
fundraising appears to be growing.

Answer 29

Limited Partnerships

Question 30

types of corporate sponsors

Answer 30

Financial funds
corporate funsd

Question 31

venture capital funding came either from

Answer 31

corporate sponsors
wealthy individuals

Question 32

venture capitalsits use __ to minimize their risk exposure

Answer 32

Staged financing

Question 33

protect the venture group’s ownership rights in the event that the firm sells new equity under duress

Answer 33

Ratchet Provisions

Question 34

provide incentives for company managers in virtually all venture capital deals.

Answer 34

Stock Option Plans

Question 35

Through selling the company they hold back to the entrepreneur/founders, known as

Answer 35

Redemption Option

Question 36

is a later stage investments and funding for management buyouts in Europe

Answer 36

Private Equity Investments

Question 37

refers only to buyout funds in the united sates

Answer 37

Private Equity

Question 38

The key venture capital markets outside the United States and Western Europe are

Answer 38

Canada
Israel
Japan
China
India

Question 39

policies led to its venture capital system that is based on funds sponsored by labor unions, though this has changed over the past decade.

Answer 39

Canadian Government

Question 40

has achieved the greatest success in venture capital because it is routinely has the highest level of R&D spending as a percent of GDP.

Answer 40

Israel

Question 41

has a financial specialty referred to as “venture capital,” but most of the firms
involved are commercial or investment bank subsidiaries that make few truly
entrepreneurial investments.

Answer 41

Japan

Question 42

is the fastest-growing major economy in the world,

Answer 42

China

Question 43

is the most interesting and promising private equity market in the
world today

Answer 43

India