Entrepreneur Challenge Test Answers

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What's CoCA?
Cost of Customer Acquisition
Cost of Content Acquisition
Cash on Cash Accounting
Cost of Conversion and Attrition
Cola


What are the "Three F's" of early-stage financing?
Friends, Family, and Fools
Forego Family Financing
Find Friends First
Fill, Finalize, and Forget


Sole proprietorships and LLC's are similar in that they:
can be set up without registration with the state
are both subject to liability
allow for pass-through taxation


Which of the following involves the least outside capital coming into the company?
Private Equity
Venture Capital
Angel Investment
Bootstrap
Friends & Family


What does it mean to be oversubscribed?
More investors want to invest than you have room for in your round
You've subscribed to too many business publications like "Inc", "Fast Company", etc.
The number of orders for your product exceeds your inventory on hand


What is the primary difference between angels and venture capitalists?
Angels only require a minority share, Venture capitalists require majority ownership
Angels invest their own funds, venture capitalists invest others funds
Angels generally make larger investments in comparison to those made by venture capitalists
Angel typically require only informal agreements, Venture capitalists require a legally binding agreement


What's the "DA" stand for in EBITDA?
Depreciation and Amortization
Debt Amortization
Debt and Administration


True or False: In a limited partnership the day-to-day operations are controlled by general partners and funded by limited or silent partners who are legally responsible for losses based on the amount of their investment.
False
True


What is attrition?
An increase of employees in a start up company.
A reduction or decrease in numbers, size, or strength of a start up company.
The percentage increase of investors between seed funding and round B funding in a start up company.


Sequoia is a(n):
Social Network Application
Mobile Application
Angel Group
Venture Capitalist group
Environmental Platform


Entrepreneurs who operate a self-financed startup without external fundraising are said to be?
Lucky
Bootstrapping
Cash flow positive
In the green


What is a Cap Table?
Similar to a periodic table but filled with "Elements" associated with business
It's the place where paperwork is signed for deals
It's an ancient Mayan surface used in bloodletting ceremonies for business owners that lost investors money
A breakdown of who owns what in the business


What does the legal acronym DBA traditionally stand for?
Dun & Bradstreet Archive
Don't be afraid
Doing Business Association
Doing Business As


What is one of the differences between a trademark and a patent?
Trademarks, unlike patents, can be renewed forever as long as they are being used in business.
There is no difference, they are essentially the same.
A trademark can only be used for a digital product, a patent is for a physical product.


What does "ramen profitable" mean for a startup?
Makes just enough to pay the founders' living expenses
Consults on the side for money
Receives seed financing from investors
Has a big client or sale in the pipeline


If you get $10,000 for 10% of your company, your company valuation is...
100,000
1,000,000
20,000
10,000
50,000


What is a convertible note?
A debt financing in which the debt converts to equity at a future equity financing
The loan on your new Audi 24 convertible
Options you provide to your employees that convert into equity when they vest fully


What does IPO stand for?
Internet Public Offering
Initial Price Offer
Interest Price Outstanding
Interest Priced Optimization
Initial Public Offering


What is Due Dilligence?
A formal estimate of the value of something on the open market.
Process by which Angel Investors speak with company founders to decide how much money they can make.
Process of vetting a business's financial information, team, and other important information that may influence the outcome of an investment.
A detailed method for managing a business.


In start ups, the term "M&A" refers to:
Mergers and Acquisitions
Management and Attrition
Money and Acquisitions
Mergers and Attrition


What is the Valley of Death in regards to fundraising?
time between first investment and first profits
time between idea conception and product launch
time before the first investment
time between first investment and exit


What is a split test?
Testing a variety of single-variable samples against one another in order to improve response rates
A "lean startup" concept that involves installing a link to a new feature without actually building the feature, in order to gauge user interest.


Which of the following isn't part of the traditional Marketing Mix?
Product
Promotion
Partners
Place
Price


An entrepreneur who continually comes up with new ideas and starts new companies is considered a:
Lifestyle entrepreneur
Serial entrepreneur
Social entrepreneur


What is "sweat equity"?
A party's contribution to a project in the form of effort - as opposed to financial equity
The hardest working, yet smelliest person on staff
A term used to measure how hard someone worked to raise funds
The opposite of "dry equity"


What's the classic 80/20 rule (the Pareto principle) with regards to marketing?
80% of your profit comes from 20% of your customers.
80% percent of the market shares the same needs
20% of sales close
80% of your time makes up 20% of your profits.


What is a seed round?
First investment round that 'seeds' the company's financials.
The kernal of an idea with which an entrepreneur starts a company.
Like the Knights of the Round table, the "round" of advisors who help an entrepreneur refine his/her business model.


What does the term "priced round" mean?
An equity financing in which the company and investors agree on a pre-money valuation
The exercise price on the options you've granted to employees, advisors, etc.
When you take your team out for a round of drinks


What is an Incubator?
A short term financing option
Places senior executives in a failing start-up
Provides workspace, coaching, and support to entrepreneurs & early-stage company's.
Helps increase a company's evalutation


What is a sole proprietorship?
A business funded by a sole investor.
A serial entrepreneur with a history of not working with co-founders.
A business owned and operated by one person.
A idea brainstormed by a single person.


What does CRM stand for?
Corporate Responsibility Management
Customer Relationship Management
Corporate Representative Media
Customer Response Management


How many owners may an LLC have?
150
Unlimited
100
200
250


Which of the following is NOT a recognized entrepreneurial influencing skill?
Criticism and punishment
Teamwork and people management
Leadership and vision
Helping and resolving conflict


What does it mean to "syndicate" an investment?
To have one company or group funding multiple startups.
To have multiple investments from the same company or group in the same startup (i.e. over multiple rounds).
To have one investment spread out over multiple time periods (aka tranches).
To have multiple companies or groups participate in a single investment round and share diligence findings.


An Entrepreneur is a person who
Anyone who fills out a W-9
An individual who makes money on the internet
A person without a job
Takes a risk to found a company in pursuit of profit
A manager in an s-corporation


Which company did Larry Page co-found?
LinkedIn Corporation
Microsoft Corporation
Facebook
Google, Inc.


Which type of venture exit typically has the largest payoff for founders and investors?
Secondary sale
IPO
Merger
Recapitalization
Acquisition


The idea "fail fast, fail often" refers to?
Lean startup philosophy
Startup failure rate
Poorly designed products
Fundraising success rate


For a company that runs a free web app, which of these metrics would be described as a vanity metric?
Monthly active users
Daily active users
Total registered users
Revenue


What is "deal fatigue"?
When the other party in a negotiation gives in to your terms because they are exhausted
The burnout that occurs when you push your sales people too hard
The negative signaling effect of trying to raise money for a very long time.


How is the post-money valuation of a company determined?
Whatever you can negotatiate - push hard for the highest possible post-money
It's a magical mix of how excited the investors are, the perceived value of the work you have done so far, and the size of the market
The net present value (NPV) of the forecasted future cash flows for 10 years.
Pre-money valuation plus the invested funds


What is a "discount rate" on a convertible note?
A risk premium of additional equity for earlier investors.
A lowering of the amount of cash added by investors.
A reduction in equity on conversion negotiated by the entrepreneur.


What does "MVP" stand for in Lean Startup methodology?
Most Viable Product
Maximum Value Proposition
Minimum Viable Product
Most Valuable Product


What is Guy Kawasaki's famous 10/20/30 rule?
10 slides, 20 minutes, 30 point font
Focus groups should have 10 people attending, ask 20 key questions, and take 30 minutes total
10 person team, 20 months, 30 million dollar exit


What is the maximum number of shareholders an S corporation may have?
75
50
25
100
150


The challenge of "crossing the chasm" refers to reaching which group of customers?
Early adopters
Late majority
Early majority
Innovators


What is another word/term for using feedback from users to improve your product/service?
Feedback Reporting
Entrepreneur's Golden Rule
Client Monitoring
Customer Development
Lean Startup


According to Dave McClure of 500 Start-ups, what three people does every tech start-up need?
Investors, Founders, Employees
Hustlers, Hackers, Designers
Leaders, Visionaries, Soldiers


What legal entity is the most Venture Capital friendly?
S-Corp
LLC
LLP
C-Corp


What type of branding is considered the default "brand architecture" and is used by most entrepreneurs?
Product branding
Hybrid branding
Corporate branding
Co-branding


For high-growth ventures, which series of funding is typically used for sales acceleration and marketing over initial product development?
Seed funding
Series B funding and beyond
Bridge funding
Series A funding


An investment "term sheet" establishes the basic terms and conditions of an investment and is:
Sometimes legally binding but usually is not
Varies from state to state
Always a legally non-binding agreement
Always a legally binding agreement


Which of the following is NOT a benefit of registering a trademark?
Retain the moral rights (control of modification)
Exclusive right to use the mark
Future right to make the mark "incontestable"
Right to recover up to 3x damages from infringement
Presumption of being the valid owner


What's a "full ratchet"?
A deal term used by investors to force the sale of the company
A deal term used by investors to accelerate option vesting
A deal term used by investors to prevent dilution


Developing a new idea by thinking without constraints is?
Brianwriting
Big-Dream Approach
Creativity
Golden Road
Brainstorming


What is the name for an initial time period during which employee stock options are not vested called?
flat
lead
cliff
freeze
deadzone


Which of the following is an online Q&A video platform available for Entrepreneurs?
Foundation
Grasshopper
Skype
Quora

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