FlexiQuiz - QAI - Module #14 Quiz

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

Financial losses and legal or regulatory issues

Accelerated investment growth

Better understanding of the company's market position

More favorable terms of investment

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

Neither, as it is not necessary

Both the founders and investors

Only the founders

Only the investors

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

Conducting background checks on the company's management team

Financial analysis and projections

Customer and supplier interviews

Drafting investment documents and ensuring legal compliance

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

A "fatal flaw" discovered during due diligence

A successful second-round due diligence

The completion of a term sheet

The company passing all compliance checks

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

Once a term sheet is signed with the company

After an informal conversation with the management team

Following the IPO

After a casual meeting with the company

When is the first round of due diligence typically conducted?

Before committing to an investment

During the IPO process

After the company goes public

After wiring the money

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

Technical Due Diligence

Environmental and Social Due Diligence

Deeper Market Due Diligence

General Market Diligence

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

To lead the company's marketing strategy

To conduct the due diligence process

To ensure legal compliance and protect rights and interests

To determine the valuation of the startup

9. 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 less formal due diligence than venture capitalists.

Venture capitalists rarely conduct financial analysis.

Angel investors conduct more extensive due diligence than venture capitalists.

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

To structure the marketing strategy for a startup

To determine the initial public offering (IPO) price

To assess the risk and potential for success of an investment

To evaluate the company's branding

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