CMAT Innovation and Entrepreneurship 2 — Questions and Answers
Question 1: What is the difference between an angel investor and a venture capitalist?
- Angel investors invest larger amounts than VCs
- Angel investors use their own money while VCs manage pooled funds (Correct answer)
- VCs only invest in non-tech companies
- Angel investors take majority ownership
Correct answer: Angel investors use their own money while VCs manage pooled funds
Angel investors are high-net-worth individuals investing personal funds, while VCs manage pooled institutional capital.
Question 2: What does 'pivoting' mean in the startup world?
- Shutting down a failing business
- Changing the fundamental business strategy while retaining core learnings (Correct answer)
- Hiring a new CEO
- Launching a product in a new country
Correct answer: Changing the fundamental business strategy while retaining core learnings
A pivot is a structured course correction in business strategy, product, or target market while maintaining core assets and learnings.
Question 3: What is a 'value proposition' in business?
- The price at which a product is sold
- The statement of what benefit a product/service provides and why customers should choose it (Correct answer)
- The total value of company assets
- The return on investment for shareholders
Correct answer: The statement of what benefit a product/service provides and why customers should choose it
A value proposition clearly communicates the unique benefits a product delivers and why it is better than alternatives.
Question 4: Which of these best describes 'design thinking'?
- Focusing on engineering specifications
- A human-centered approach to innovation that emphasizes empathy and iteration (Correct answer)
- Using aesthetics to differentiate products
- Following a strict linear product development process
Correct answer: A human-centered approach to innovation that emphasizes empathy and iteration
Design thinking is an iterative, user-centered problem-solving process involving empathy, ideation, prototyping, and testing.
Question 5: In entrepreneurship, what is an 'exit strategy'?
- A plan to close an unprofitable business quickly
- A founder's plan to sell or transfer ownership to realize value from the business (Correct answer)
- A strategy to exit a new market
- A contingency plan for economic downturns
Correct answer: A founder's plan to sell or transfer ownership to realize value from the business
An exit strategy is how entrepreneurs and investors plan to liquidate their investment — common exits include IPOs, acquisitions, or MBOs.
Question 6: What is 'blue ocean strategy'?
- A strategy focused on beating direct competitors
- Creating uncontested market space where competition is irrelevant (Correct answer)
- Entering developing country markets first
- Focusing on sustainable ocean-related businesses
Correct answer: Creating uncontested market space where competition is irrelevant
Blue Ocean Strategy by Kim & Mauborgne advocates creating new demand in uncontested market space rather than competing in existing markets.
CMAT Innovation and Entrepreneurship 2
What is the difference between an angel investor and a venture capitalist?