FlexiQuiz - QAI - Module #14 Quiz

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

To evaluate the company's branding

To structure the marketing strategy for a startup

To determine the initial public offering (IPO) price

To assess the risk and potential for success of an investment

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

General Market Diligence

Technical Due Diligence

Environmental and Social Due Diligence

Deeper Market Due Diligence

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

The company passing all compliance checks

A "fatal flaw" discovered during due diligence

A successful second-round due diligence

The completion of a term sheet

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

To determine the valuation of the startup

To lead the company's marketing strategy

To conduct the due diligence process

To ensure legal compliance and protect rights and interests

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

Only the investors

Neither, as it is not necessary

Both the founders and investors

Only the founders

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

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.

Venture capitalists rarely conduct financial analysis.

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

Drafting investment documents and ensuring legal compliance

Conducting background checks on the company's management team

Financial analysis and projections

Customer and supplier interviews

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

More favorable terms of investment

Financial losses and legal or regulatory issues

Accelerated investment growth

Better understanding of the company's market position

When is the first round of due diligence typically conducted?

After wiring the money

Before committing to an investment

During the IPO process

After the company goes public

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

After a casual meeting with the company

Once a term sheet is signed with the company

After an informal conversation with the management team

Following the IPO

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