ENT143 M1 Exam

• Venture


  A venture, if organized as a corporation, may desire to provide venture investor liquidity by establishing a public market for its equity.

  True
• An initial public offering provides a venture with a source of bridge financing.

  False
• Entrepreneurial process


  1. Developing opportunities

  2. Gathering resources

  3. Managing and building operations
• Goal of entrepreneurial process

  Create value
• Countries that engage in democratic capitalism


  • United States
  • France
  • Germany
• Traits that successful entrepreneurs do NOT exhibit

  • Are pessimistic about the future
• Mark Twain: '"I was seldom able to see an opportunity, until it ceased to be one."'
• About two-thirds of all new employers in the United States survive for at least two years
• About one-half of all new employers in the United States survive for at least five years after being started
• What is NOT considered a megatrend in this textbook


  • Fads
• Fads


  Are not predictable, have short lives, and do not involve macro changes
• Sources of entrepreneurial opportunities


  • Societal, demographic, and technological trends
  • Crises and "bubbles"
  • Emerging economies and global changes
• Political changes are NOT a source of entrepreneurial opportunities referred to in this textbook
• Gig economy


  Where individuals accept short-term job assignments instead of having full-time employment
• Sharing economy


  A developing societal megatrend
• Generation classifications associated with births in the 1965–1980 time period


  • Generation X
• Harry Dent documented major generation waves in the United States during the twentieth century in 1993
• 1. E-commerce

  Electronic commerce
• The "dot.com" or Internet bubble burst in 2000
• Disruptive innovation


  An innovation that creates a new market or network that displaces an existing market or network
• This textbook emphasizes seven principles of entrepreneurial finance
• Time value of money concept


  Associated with the principle that while accounting is the language of business, cash is the currency
• Common financial goal of the entrepreneur and the venture equity investors


  • Maximizing the value of the venture for its owners
• Which of the following is considered to be an agency conflict?

  • Owner–manager conflict
• Owner-manager conflict


  Usually minimized through the use of equity incentives
• Owner-debtholder conflict increases in divergence as the venture gets close to bankruptcy
• Declining stage is NOT a life cycle stage of a successful venture
• does NOT describe activity during the startup stage of a venture's life cycle?

  • Operating cash flows are generated
• Seasoned financing


  Obtaining bank loans, issuing bonds, and issuing stock, characteristic of a venture's life cycle
• Rapid-growth stage financing


  Funds for plant expansion, marketing expenditures, working capital, and product or service improvements
• Secondary market transaction


  Founder and venture investor shares that are sold to the public after the initial public offering
• Entities that advise and assist corporations on the type, timing, and costs of issuing new debt and equity securities

  • Investment banking firms
• The last three stages of a successful venture's life cycle occur in the order: survival, rapid-growth, early-maturity
• The development stage occurs between the startup and survival stages of a venture's life cycle
• Early-maturity stage financing


  Mezzanine financing
• Mezzanine financing


  Associated with the rapid-growth stage of a venture's life cycle
• What entrepreneurial finance involves


  • Planning
  • Funding
  • Operations
  • Valuation
• The last stage in a successful venture's life cycle is called the early-maturity stage
• Survival stage financing


  Mezzanine financing
• Survival stage


  First stage of a successful venture's life cycle