FlexiQuiz - QAI - Module #14 Quiz

When is the first round of due diligence typically conducted?

After the company goes public

Before committing to an investment

After wiring the money

During the IPO process

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

Only the founders

Neither, as it is not necessary

Only the investors

Both the founders and investors

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

Venture capitalists rarely conduct financial analysis.

Angel investors typically invest larger amounts of capital.

Angel investors conduct more extensive due diligence than venture capitalists.

Angel investors conduct less formal due diligence than venture capitalists.

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

To assess the risk and potential for success of an investment

To structure the marketing strategy for a startup

To evaluate the company's branding

To determine the initial public offering (IPO) price

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

The completion of a term sheet

A "fatal flaw" discovered during due diligence

The company passing all compliance checks

A successful second-round due diligence

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

Customer and supplier interviews

Conducting background checks on the company's management team

Drafting investment documents and ensuring legal compliance

Financial analysis and projections

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

Better understanding of the company's market position

Financial losses and legal or regulatory issues

More favorable terms of investment

Accelerated investment growth

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

Following the IPO

Once a term sheet is signed with the company

After a casual meeting with the company

After an informal conversation with the management team

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

To ensure legal compliance and protect rights and interests

To lead the company's marketing strategy

To determine the valuation of the startup

To conduct the due diligence process

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

Deeper Market Due Diligence

Technical Due Diligence

General Market Diligence

Environmental and Social Due Diligence

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