Funding and Finance Flashcards
6 cards from real Entrepreneurship practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Funding and Finance flashcards as text
What is crowdfunding?
Answer: A method of raising small amounts of capital from a large number of people, typically via an online platform
Crowdfunding allows entrepreneurs to raise funds from the public through platforms like Kickstarter or Indiegogo, often in exchange for rewards or equity.
What does 'pre-money valuation' mean?
Answer: The value of a company before receiving new investment
Pre-money valuation is the agreed-upon value of a company immediately before a new round of investment is added.
What is equity dilution?
Answer: The reduction of an existing shareholder's ownership percentage when new shares are issued
Equity dilution occurs when a company issues new shares, reducing the ownership percentage of existing shareholders.
What is a cap table?
Answer: A spreadsheet showing the ownership stakes of all shareholders in a company
A capitalization table (cap table) lists all securities a company has issued and shows the ownership percentage of each shareholder.
What is a term sheet?
Answer: A non-binding document outlining the key terms of a proposed investment
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.
What does 'due diligence' mean in startup funding?
Answer: An investor's thorough investigation of a startup before committing capital
Due diligence is the comprehensive appraisal process investors undertake to verify a startup's financials, legal standing, team, and business claims before investing.