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 venture capital?
Answer: Private equity investment in high-growth startups in exchange for equity
Venture capital (VC) is financing provided by investors to high-potential startups in exchange for an equity stake and often board involvement.
What is an angel investor?
Answer: A wealthy individual who provides capital to startups in early stages
Angel investors are high-net-worth individuals who invest their personal funds into early-stage companies, often providing mentorship alongside capital.
What does equity financing mean?
Answer: Raising capital by selling ownership shares in a company
Equity financing involves raising capital by selling a portion of ownership (shares) in the business to investors.
What is a convertible note?
Answer: A short-term debt instrument that converts into equity at a future funding round
A convertible note is a debt instrument that automatically converts into equity—typically at a discount—when the startup raises a subsequent financing round.
What is a SAFE (Simple Agreement for Future Equity)?
Answer: An investment contract that gives investors the right to future equity without debt terms
A SAFE is a financing instrument created by Y Combinator that gives investors the right to receive equity in a future round without accruing interest.
What is the SBA's primary role for small business entrepreneurs?
Answer: To provide loan guarantees and resources that help small businesses access capital
The Small Business Administration (SBA) backs loans through partner lenders, reducing risk for banks and making capital more accessible to small businesses.