FlexiQuiz - QAI - Module #14 Quiz

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

Technical Due Diligence

General Market Diligence

Environmental and Social Due Diligence

Deeper Market Due Diligence

2. 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.

Angel investors conduct less formal due diligence than venture capitalists.

Venture capitalists rarely conduct financial analysis.

3. 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

A successful second-round due diligence

The completion of a term sheet

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 determine the initial public offering (IPO) price

To assess the risk and potential for success of an investment

When is the first round of due diligence typically conducted?

Before committing to an investment

After wiring the money

During the IPO process

After the company goes public

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

After an informal conversation with the management team

Following the IPO

7. 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

Financial analysis and projections

Customer and supplier interviews

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

Financial losses and legal or regulatory issues

More favorable terms of investment

Accelerated investment growth

Better understanding of the company's market position

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

To lead the company's marketing strategy

To determine the valuation of the startup

To conduct the due diligence process

To ensure legal compliance and protect rights and interests

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

Neither, as it is not necessary

Only the investors

Both the founders and investors

Only the founders

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