Finance And Accounting

Question: Why do venture capitalists tend to focus on riskier investments?
A
They are not regulated and can take on risky investment with a potential for huge losses.

B
They can receive larger tax write offs since they fail more often than succeed.

C
There are too many people already investing in low risk industries.

D
The venture capital model is to invest in early stage companies with large upside potential.

Note: Answer not sure
1. Report
Question: Why would a venture capital firm require they be on the board of directors if they choose to invest in a target company?
A
So that they may be able to demand compensation for the board seat, generating revenue

B
So that they may be able to spy on the company

C
So that they may be able to help guide the target company and see that they are meeting the goals agreed on

D
So that they may be able to force the company to make decisions they don't want to

Note: Answer not sure
1. Report
Question: Why would a venture capitalist want to exit a growing company?
A
Because they don't want to take on additional risk of the company failing down the road

B
Because of the tax implications if they stay invested too long

C
Because they want to invest in the competition now that the business model is proven

D
Because their business model is to help companies grow to a point, get return on their investment, then move onto the next investment

Note: Answer not sure
1. Report
Question: Why does a venture capital firm require a substantial amount of equity for the investment?
A
According to the risk — reward concept, they deserve a large return on their investment as they are taking on a substantial risk.

B
Because they control the negotiations and hold companies hostage for getting more equity.

C
Because they are allowed by law to hold as much as possible.

D
Because it reduces their tax implications through holding more investment.

Note: Answer not sure
1. Report
Question: Which of the following would be encouraging for a venture capitalist to see when screening a company?
A
A management that is focused on getting rich quickly

B
A management that has invested $100,000 of their own money to prove the concept and prepare for a venture capitalist's entrance

C
A bad management team with a terrific idea

D
A company entering a new market with no competition

Note: Answer not sure
1. Report
Question: Why do venture capitalists typically not sign "non disclosure agreements" which protect the target companies from the venture capitalists stealing their idea?
A
Target companies often write the "non disclosure agreements" wrongly.

B
Target companies try to trick the venture capitalists into signing binding agreements.

C
It is time consuming as the venture capitalist has to talk to a number of companies, and the companies have to make sure the venture capitalist is not in the business of stealing ideas and launching them on their own.

D
It is not legally required; so they refuse to sign.

Note: Answer not sure
1. Report
Question: Who is in charge of the investment process?
A
The target company

B
The venture capital firm

C
The advisors

D
The people stipulated by the IRS

Note: Answer not sure
1. Report

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Question: Why do venture capitalists tend to focus on riskier investments?

Question: Why would a venture capital firm require they be on the board of directors if they choose to invest in a target company?

Question: Why would a venture capitalist want to exit a growing company?

Question: Why does a venture capital firm require a substantial amount of equity for the investment?

Question: Which of the following would be encouraging for a venture capitalist to see when screening a company?

Question: Why do venture capitalists typically not sign "non disclosure agreements" which protect the target companies from the venture capitalists stealing their idea?

Question: Who is in charge of the investment process?