FlexiQuiz - QAI - Module #14 Quiz

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

To ensure legal compliance and protect rights and interests

To determine the valuation of the startup

To lead the company's marketing strategy

To conduct the due diligence process

When is the first round of due diligence typically conducted?

After the company goes public

After wiring the money

Before committing to an investment

During the IPO process

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

Only the founders

Only the investors

Neither, as it is not necessary

Both the founders and investors

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

Customer and supplier interviews

Drafting investment documents and ensuring legal compliance

Conducting background checks on the company's management team

Financial analysis and projections

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

To assess the risk and potential for success of an investment

To evaluate the company's branding

To structure the marketing strategy for a startup

To determine the initial public offering (IPO) price

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

Venture capitalists rarely conduct financial analysis.

Angel investors conduct more extensive due diligence than venture capitalists.

Angel investors typically invest larger amounts of capital.

Angel investors conduct less formal due diligence than venture capitalists.

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

Deeper Market Due Diligence

General Market Diligence

Technical Due Diligence

Environmental and Social Due Diligence

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

Better understanding of the company's market position

More favorable terms of investment

Financial losses and legal or regulatory issues

Accelerated investment growth

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

The completion of a term sheet

The company passing all compliance checks

A "fatal flaw" discovered during due diligence

A successful second-round due diligence

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

Following the IPO

After a casual meeting with the company

Once a term sheet is signed with the company

After an informal conversation with the management team

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