Question

QUESTION 11

A 1X liquidation preference would give the Venture Capital Fund the right to the recovery of 100% of their investment before any distributions are made to other shareholders of the company.

True

False

QUESTION 12

Venture capitalists rely on preferred stock in a company to skew investment returns in their favor relative to the owners of the common stock, gain a disproportionate level of control of key decisions relative to the common shareholders and ensure that their interests are aligned with the founders.

True

False

QUESTION 13

The term sheet between an investors and founder is a legally binding agreement.

True

False

QUESTION 14

The term sheet between a venture capital company and the founders of a venture give control of the company to the venture capitalists.

True

False

QUESTION 15

One thing that entrepreneurs seek to get from a term sheet is sufficient capital to bring the venture to the next business milestone while giving up as little of the company as possible.

True

False

Answer 1

QUESTION 11:- A 1X liquidation preference would give the Venture Capital Fund the right to the recovery of 100% of their investment before any distributions are made to other shareholders of the company.

Answer:- True

QUESTION 12:- Venture capitalists rely on preferred stock in a company to skew investment returns in their favor relative to the owners of the common stock, gain a disproportionate level of control of key decisions relative to the common shareholders and ensure that their interests are aligned with the founders.

Answer:- True

Venture capital financing is a type of financing by venture capital. It is private equity capital provided as seed funding to early-stage, high-potential, growth companies (startup companies)

QUESTION 13:- The term sheet between an investors and founder is a legally binding agreement.

Answer:- False

Basically Term Sheet reflects an agreed-on valuation and sets out the amount of the obligation on the part of any party, nor will any legally binding agreement.

QUESTION 14:- The term sheet between a venture capital company and the founders of a venture give control of the company to the venture capitalists.

Answer:- True

QUESTION 15:- One thing that entrepreneurs seek to get from a term sheet is sufficient capital to bring the venture to the next business milestone while giving up as little of the company as possible.

Answer:- True

Because fund raising is time consuming and there is always requirement of more money to go to the next activity. This is the reason pre money valuation is carried by company before it goes for new investor.