FlexiQuiz - QAI - Module #14 Quiz

1. Which party or parties are recommended to hire an attorney during startup equity investments?

Neither, as it is not necessary

Only the investors

Only the founders

Both the founders and investors

When is the first round of due diligence typically conducted?

Before committing to an investment

After wiring the money

After the company goes public

During the IPO process

3. Why should attorneys be utilized for startup equity investments?

To lead the company's marketing strategy

To determine the valuation of the startup

To ensure legal compliance and protect rights and interests

To conduct the due diligence process

4. What is the primary purpose of due diligence in the investment process?

To structure the marketing strategy for a startup

To evaluate the company's branding

To assess the risk and potential for success of an investment

To determine the initial public offering (IPO) price

5. What is one key difference between angel investors and venture capitalists in terms of due diligence?

Angel investors typically invest larger amounts of capital.

Angel investors conduct more extensive due diligence than venture capitalists.

Venture capitalists rarely conduct financial analysis.

Angel investors conduct less formal due diligence than venture capitalists.

6. How does a venture fund typically begin the second round of due diligence?

Once a term sheet is signed with the company

After a casual meeting with the company

Following the IPO

After an informal conversation with the management team

7. What are the potential consequences of avoiding due diligence?

Financial losses and legal or regulatory issues

More favorable terms of investment

Better understanding of the company's market position

Accelerated investment growth

8. Which of the following is NOT a focus of the second-round due diligence?

Technical Due Diligence

General Market Diligence

Deeper Market Due Diligence

Environmental and Social Due Diligence

9. What aspect of due diligence is likely to be handled by attorneys?

Conducting background checks on the company's management team

Drafting investment documents and ensuring legal compliance

Customer and supplier interviews

Financial analysis and projections

10. What can cause a venture fund to decide against closing a deal?

A "fatal flaw" discovered during due diligence

The company passing all compliance checks

The completion of a term sheet

A successful second-round due diligence

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