FlexiQuiz - QAI - Module #12 Quiz

1. What is the primary purpose of a waterfall analysis in venture capital?

To calculate gross proceeds of an acquisition.

To track the daily performance of a startup's shares.

To calculate the total profits and allocate them to stakeholders.

To determine the pre-money valuation of a startup.

2. Syndicate Investor A (SIA) invested $50,000 in StartupX in the form of a Convertible Note with a 25% discount. A year later StartupX raised $1,500,000 from Venture Investor A (VIA) at a post-money valuation of $8,000,000. This translated into a $5.00 per share price. How many shares will SIA recieive upon its converson of the Note assuming SIA earned $2500 in interest?

12,333 shares

14,000 shares

13,333 shares

16,250 shares

3. When are cumulative dividends typically paid to preferred stockholders?

Annually, regardless of a liquidity event.

After the startup reaches a certain revenue milestone.

At the time of the initial investment.

At the time of a liquidity event, such as an acquisition or IPO.

4. What is the primary purpose of cumulative dividends for preferred stockholders in a startup?

To provide an immediate return on investment at the time of purchase.

To ensure that investors with preferred shares receive a minimum return.

To offer tax benefits to shareholders during a liquidity event.

To encourage investors to convert their shares into common stock.

5. In a "Stacked Preferences" scenario, how are returns from a liquidity event distributed among investors in a startup's equity stack?

It depends on the total profits generated by the startup.

Later-round investors have higher priority over earlier investors.

Investors with the largest stake receive the highest returns.

Investors from different rounds receive equal shares.

6. Venture Investor A (VIA) is exiting from a $1,500,000 investment in StartupX in which they purchased Participating Preferred shares with a 1.25x Return Preference (7% ownership, fully-diluted). Given their investment structure, what will be their final payout assuming a $75,000,000 Exit and a Preference overhang of $10,000,000 (including VIA).

$1,875,000

$7,125,750

$6,425,000

$4,375,750

7. Syndicate Investor A (SIA) invested $75,000 in StartupX in the form of a SAFE with a $5,000,000 Cap. A year later StartupX raised $2,000,000 from Venture Investor A (VIA) at a post-money valuation of $8,000,000. This translated into a $7.00 per share price. How many shares will SIA receive upon its conversion of the SAFE?

7,142 shares

11,428 shares

12,857 shares

10,714 shares

8. What is the primary purpose of a capitalization table (cap table)?

To calculate the company's valuation in the future.

All answers are correct

To show the ownership structure of a company.

To track the company's debt initiatives.

9. What is the term used to describe the cumulative impact of liquidation preferences on a startup's equity stack?

Debt Liquidation Schedule

Preference Overhang

Equity Stack

Common Equity Impact

10. StartupX is closing a $250,000 seed round of capital with Venture Investor A (VIA) in which VIA will receive 22% of the company fully-diluted. Assuming there are 2,000,000 shares currently outstanding, how many new shares will be issued to bring VIA onto the cap table?

452,941 shares

564,102 shares

395,121 shares

440,000 shares

11. In the context of a waterfall analysis, what is the significance of the term "Last Money In, First Money Out"?

It represents a chronological order of investor contributions.

It signifies the order of common shareholders' payouts.

It indicates the order in which dividends are calculated.

It refers to the most recent investors receiving returns first.

12. Using the provided formula for calculating cumulative dividends, if an investor holds $5,000,000 in Convertible Preferred Shares with a 5% annual dividend rate for 18 months, how much cumulative dividends would they earn?

$375,000

$500,000

$250,000

$125,000

13. In a "Pari Passu Preferences" scenario, how are liquidation proceeds distributed among different rounds of preferred shares in a startup's equity stack?

According to the percentage of the ownership stake.

In reverse order, starting with the earliest investors.

In a random fashion, determined by the startup's founders.

Proportionately, with equal priority for all rounds.

14. Venture Investor A (VIA) is exiting from a $2,500,000 investment in StartupX in which they received 2,200,000 Convertible Preferred Shares with a 1.5x Return Preference. Assuming a $50,000,000 exit, Preference Overhang of $10,000,000 (not including VIA), and Total Outstanding Shares of 23,000,000, what will be VIA's final payout (assuming they’re going to do what’s in their best financial interest)?

$6,135,232

$3,750,000

$5,434,782

$3,826,087

15. Two founders came together to launch StartupX, an AI Company focused on political activation. They both contributed $50,000 and issued themselves each 2,000,000 shares. What is the initial share price?

$.040

$.015

$.025

$.035