FlexiQuiz - QAI - Module #14 Quiz

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

A successful second-round due diligence

The company passing all compliance checks

The completion of a term sheet

A "fatal flaw" discovered during due diligence

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

Financial analysis and projections

Drafting investment documents and ensuring legal compliance

Customer and supplier interviews

Conducting background checks on the company's management team

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

To conduct the due diligence process

To determine the valuation of the startup

To ensure legal compliance and protect rights and interests

To lead the company's marketing strategy

When is the first round of due diligence typically conducted?

During the IPO process

After wiring the money

After the company goes public

Before committing to an investment

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

Angel investors conduct less formal due diligence than venture capitalists.

Angel investors conduct more extensive due diligence than venture capitalists.

Venture capitalists rarely conduct financial analysis.

Angel investors typically invest larger amounts of capital.

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

After an informal conversation with the management team

After a casual meeting with the company

Following the IPO

Once a term sheet is signed with the company

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

Environmental and Social Due Diligence

General Market Diligence

Deeper Market Due Diligence

Technical Due Diligence

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

Accelerated investment growth

More favorable terms of investment

Better understanding of the company's market position

Financial losses and legal or regulatory issues

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

To determine the initial public offering (IPO) price

To evaluate the company's branding

To assess the risk and potential for success of an investment

To structure the marketing strategy for a startup

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

Both the founders and investors

Only the investors

Only the founders

Neither, as it is not necessary

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