Entrepreneurship Funding and Finance 2

Question 1

What is crowdfunding?

Accepted Answer

A method of raising small amounts of capital from a large number of people, typically via an online platform

Answer

Crowdfunding allows entrepreneurs to raise funds from the public through platforms like Kickstarter or Indiegogo, often in exchange for rewards or equity.

Question 2

What does 'pre-money valuation' mean?

Accepted Answer

The value of a company before receiving new investment

Answer

Pre-money valuation is the agreed-upon value of a company immediately before a new round of investment is added.

Question 3

What is equity dilution?

Accepted Answer

The reduction of an existing shareholder's ownership percentage when new shares are issued

Answer

Equity dilution occurs when a company issues new shares, reducing the ownership percentage of existing shareholders.

Question 4

What is a cap table?

Accepted Answer

A spreadsheet showing the ownership stakes of all shareholders in a company

Answer

A capitalization table (cap table) lists all securities a company has issued and shows the ownership percentage of each shareholder.

Question 5

What is a term sheet?

Accepted Answer

A non-binding document outlining the key terms of a proposed investment

Answer

A term sheet is a non-binding agreement that summarizes the key financial and other terms of an investment offer before formal legal documents are drafted.

Entrepreneurship Practice Test

Entrepreneurship Practice Test

Entrepreneurship Funding and Finance 2