Venture Capital and Private Equity
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Course Introduction
This course offers a comprehensive exploration of venture capital and private equity, focusing on the financing of innovative startups and the growth of established firms through private investment. Topics include the structure and strategies of venture capital and private equity funds, deal sourcing, valuation techniques, due diligence, negotiation of investment terms, portfolio management, and the processes for exiting investments. Students will analyze real-world case studies to understand the perspectives of entrepreneurs and investors, and gain insights into current trends, regulatory considerations, and the impact of alternative investments on the broader financial landscape.
Recommended Textbook
Entrepreneurship Successfully Launching New Ventures 5th Edition by Bruce R. Barringer
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Chapter 1: Introduction to Entrepreneurship
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Sample Questions
Q1) In the book The Theory of Economic Development, ________ argued that entrepreneurs develop new products and technologies that, over time, make current products and technologies obsolete. This process is called creative destruction.
A) Malcolm Gladwell
B) Seth Godin
C) Joseph Schumpeter
D) Thomas Friedman
E) Jim Collins
Answer: C
Q2) What is entrepreneurship? What is the essence of entrepreneurial behavior?
Answer: Entrepreneurship is the process by which individuals pursue opportunities without regard to the resources they currently control.The essence of entrepreneurial behavior is identifying opportunities and putting useful ideas into practice.
Q3) According to reliable statistics, 9 out of 10 businesses fail in their first few years of existence.
A)True
B)False
Answer: False
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3
Chapter 2: Recognizing Opportunities and Generating Ideas
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Q1) An idea is a thought, impression, or notion. It may or may not meet the criteria of an opportunity.
A)True
B)False
Answer: True
Q2) An individual who identifies a business idea on his or her own is referred to as a(n) ________ entrepreneur.
A) separate
B) functional
C) lone
D) individual
E) solo
Answer: E
Q3) A(n) ________ is a physical or digital repository for storing ideas.
A) suggestion bank
B) idea depository
C) suggestion pool
D) idea bank
E) proposition pool
Answer: D
Page 4
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Chapter 3: Feasibility Analysis
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Sample Questions
Q1) Which of the following is an example of a resource that normally would not be evaluated as part of the "resource sufficiency" stage of organizational feasibility analysis?
A) Ability to form favorable business partnerships
B) Financial resources
C) Affordable office space
D) Key equipment needed to operate the business
E) Key support personnel
Answer: B
Q2) Industry/target market feasibility is an assessment of the overall appeal of the industry and the target market for the product or service being proposed.
A)True
B)False
Answer: True
Q3) Census Bureau data, analyst forecasts, and other pertinent information gleaned through library and Internet research are examples of primary research.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Developing an Effective Business Model
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Q1) Jenna Franklin is completing the portion of the Barringer/Ireland Business Model Template that describes the most important costs that will be incurred to support her business model. Jenna is completing the ________ structure box in the business model template.
A) expense
B) outlay
C) payment
D) overhead
E) cost
Q2) Cynthia Hamilton is launching a chain of smoothie restaurants. Among Cynthia's key partners will be firms that provide her the ingredients needed to make her smoothies. In the terminology of the Barringer/Ireland Business Model Template, these partners are called ________.
A) dealers
B) suppliers
C) merchants
D) traders
E) brokers
Q3) Describe the Barringer/Ireland Business Model Template and discuss its purpose.
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Chapter 5: Industry and Competitor Analysis
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Sample Questions
Q1) The primary opportunity existing for startups in fragmented industries is to
A) pursue a niche strategy, which focuses on a narrow segment of the industry that might be encouraged to grow through product or process innovation
B) win customers by placing an emphasis on service and process innovation
C) capture a first-mover advantage
D) pursue a cost reduction strategy, which is accomplished through achieving lower costs than industry incumbents through process innovation
E) consolidate the industry and establish industry leadership as a result of doing so
Q2) The five competitive forces model is a framework for understanding the structure of an industry.
A)True
B)False
Q3) The two trends that are most important to focus on in an industry analysis are business trends and environmental trends.
A)True
B)False
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Page 7
Chapter 6: Writing a Business Plan
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Q1) The major revenue drivers, which are the ways a business earns money, should be first identified in "The Economics of the Business" section of the business plan.
A)True
B)False
Q2) According to the textbook, a business plan is best described as a(n) ________.
A) narrative description of a new business
B) contract
C) budget
D) agreement
E) marketing initiative
Q3) The pro forma financial statements are the heart of the operations section of a business plan.
A)True
B)False
Q4) For most business plans, 25 to 35 pages are sufficient.
A)True
B)False
Q5) What is a business plan?
Q6) What are the two main reasons for writing a business plan?
Page 8
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Chapter 7: Preparing the Proper Ethical and Legal Foundation
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Q1) Corporations are organized as either ________ corporations or ________ corporations.
A) permanent; temporary
B) general; limited
C) voluntary; statutory
D) C; subchapter S
E) regular; limited liability
Q2) Stock options are a special form of incentive compensation.
A)True
B)False
Q3) Most C corporations have two classes of stock- ________ and ________.
A) premium; normal
B) common; preferred
C) standard; substandard
D) regular; special
E) ordinary; distinct
Q4) Choosing a legal entity for a firm is a one-time event. Once a form of legal entity has been chosen, it cannot be changed.
A)True
B)False
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Chapter 8: Assessing a New Venture's Financial Strength and Viability
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Q1) The pro forma ________ provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.
A) balance sheet
B) statement of cash flows
C) income statement
D) expense statement
E) statement of owners' equity
Q2) A firm's pro forma financial statements are similar to its historical financial statements except that they ________.
A) do not include the income statement
B) are required by the SEC in all cases
C) look back rather than forward
D) look forward rather than back
E) do not include the statement of cash flows
Q3) Describe the difference between historical and pro forma financial statements.
Q4) Stability is a company's ability to meet its short-term financial obligations.
A)True
B)False
Q5) Describe each of the four primary financial objectives of firms.
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Chapter 9: Building a New-Venture Team
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Q1) Jason Andersen just finished writing a business plan for a new type of office supply store. One thing Jason included in the "Management Team & Company Structure" section of his business plan is a chart that depicts the most important skills that are needed for his business and where skills gaps exist. Jason included a(n)________ in his business plan.
A) skills profile
B) talent report
C) abilities profile
D) expertise report
E) talent summary
Q2) Most boards of advisers have between 3 and 5 members.
A)True
B)False
Q3) The fact that a corporation has a board of directors precludes it from having a board of advisors.
A)True
B)False
Q4) What is a skills profile and what is it used for?
Q5) What is SCORE? What is its role in helping a firm fill out its new venture team?
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Chapter 10: Getting Financing or Funding
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Q1) According to the textbook, many entrepreneurs go about the task of raising capital haphazardly because they ________.
A) are uncomfortable talking about money and they haven't written a business plan
B) lack experience in this area and because they don't know much about their choices C) are focused on the nuts and bolts of starting their business
D) haven't completed a feasibility analysis or business plan
E) are intimidated by the process and they are unsure of how much money they need
Q2) The SBIR is a ________-phase program, meaning that firms that qualify have the potential to receive more than one grant to fund a particular proposal.
A) two
B) three
C) six
D) nine
E) twelve
Q3) What is an elevator speech? How did it get its name?
Q4) Why do most firms need funding? Provide a brief explanation of each reason.
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Page 12
Chapter 11: Unique Marketing Issues
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Q1) What is a tagline? Provide an example of a popular tagline, and discuss why you think it has been effective?
Q2) A referent account is an early user of a firm's product who is willing to give a testimonial regarding his or her experience with the product.
A)True
B)False
Q3) Describe the concept of guerrilla marketing. Why is guerrilla marketing particularly suitable for entrepreneurial firms?
Q4) Kyle White owns a sporting goods store that appeals to hunters and fishermen. The market that Kyle is trying to appeal to is called his ________ market.
A) focal
B) objective
C) target
D) critical
E) intention
Q5) A firm's marketing mix is the assortment of products and services that it sells. A)True B)False
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Chapter 12: The Importance of Intellectual Property
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Q1) Which of the following was not identified in the textbook as one of the common mistakes that entrepreneurs make regarding intellectual property?
A) Not fully recognizing the value of their intellectual property
B) Not properly identifying all their intellectual property
C) Not properly registering their Internet domain names
D) Not using their intellectual property as part of their overall plan for success
E) Not taking sufficient steps to protect their intellectual property
Q2) Which form of intellectual property protection is the only one expressly mentioned in the original articles of the U.S. Constitution?
A) Assurances
B) Patents
C) Copyrights
D) Trade secrets
E) Trademarks
Q3) Trademark law falls under the Lanham Act, which passed in 1946.
A)True
B)False
Q4) Identify and briefly describe the three types of patents.
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Page 14
Chapter 13: Preparing for and Evaluating the Challenges of Growth
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Q1) The majority of businesses go through a discernable set of stages of growth referred to as the ________.
A) business rotation cycle
B) business existence cycle
C) organizational sequence
D) business life cycle
E) organizational life cycle
Q2) Economies of scale occur when ________.
A) increasing production lowers the average cost of each unit produced
B) increasing production increases the average cost of each unit produced
C) decreasing production lowers the average cost of each unit produced
D) decreasing production increases the average cost of each unit
E) increasing production increases the fixed cost of doing business
Q3) Business success doesn't always scale.
A)True
B)False
Q4) All businesses have the potential to be aggressive growth firms.
A)True
B)False
Q5) What is the organizational life cycle and why is it important?
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Chapter 14: Strategies for Firm Growth
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Q1) In an acquisition, the surviving firm is called the ________, and the firm that is acquired is called the ________.
A) target; acquirer
B) goal; objective
C) objective; aggressor
D) acquirer; target
E) aggressor; objective
Q2) Internally generated growth is often called organic growth because it does not rely on ________.
A) outside intervention
B) its own skills and capabilities
C) external funding
D) internal leadership
E) internal design expertise
Q3) An advantage of internal growth is that it is a rapid form of growth.
A)True
B)False
Q4) Geographic expansion is most common in manufacturing settings.
A)True
B)False
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Chapter 15: Franchising
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Q1) A master franchisee, in addition to having the right to open and operate a specific number of locations in a particular area, also has the right to ________.
A) stop making royalty payments if its sales decline
B) sell products made by companies other than the franchisor
C) offer and sell the franchise to other people in its area
D) use its own operating manuals to run its franchise outlets
E) stop making royalty payments if it is losing money
Q2) Which of the following was not identified in the textbook as one of the disadvantages of franchising a business?
A) Loss of control
B) Friction with franchisees
C) Franchisee motivation
D) Differences in required business skills
E) Legal expenses
Q3) In the majority of cases, a franchisee pays a royalty based on a percentage of weekly or monthly net income.
A)True
B)False
Q4) How can a person tell if franchising is right for them?
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