ENFB 4190 Test 2 – Questions With Complete Solutions
Question :What is the seed round?
Correct answer: first one
Question :What percentage of your company might you sell in
a seed round?
Correct answer: atleast %10 of your company, maybe more
depending on valuation
Question :What does it mean if a knowledgeable investor
invests in your idea at the seed stage?
Correct answer: if your idea is good enough that a
knowledgable investor is invest dollars then you have a really good idea, (min valuation $0.5 million)
Question :What stage is the seed round associated with?
Correct answer: R & D or finance stage,
Question :What document is typically needed to start with in
the seed round?
Correct answer: 2-3 page feasibility study
Question :What is the financial implication for founders
starting in the seed round?
Correct answer: starting with a feasibility study, not getting
salaries
Question :Who typically constitutes the management team in
the seed round?
Correct answer: Mangt team is just you,
Question :What is the typical amount of funding in a seed
round?
Correct answer: $15-500k
Question :What are typical uses of seed funding?
Correct answer: building prototype, website, patents (at least
provisional for one year), initial marketing research
Question :What are the sources of funding for seed level
funding?
Correct answer: friends and family, founders, fools
(accredited investors), accelerators
Question :Who are considered accredited sophisticated
investors or fools/angels?
Correct answer: SEC accredited investors, 200,000 a year
filing individually, or 300'000 a year, or have a net worth of 1 million - equity primary residence
Question :What is the risk of raising money from
unaccredited investors who are not friends and family?
Correct answer: you are in aheap of trouble if you raise
money from unaccredited investors that aren't friends and family
Question :What is the Series A round?
Correct answer: second one
Question :What stage is the Series A round associated with?
Correct answer: Launch stage
Question :What document is typically needed for a Series A
round?
Correct answer: fully vetted business plan
Question :What changes regarding founder compensation in
the Series A round?
Correct answer: salaries
Question :What is the revenue status typically in the first
round of Series A funding?
Correct answer: no revenue, pre revenue for first round
Question :How long is each round of funding expected to
last?