FlexiQuiz - QAI - Module #14 Quiz

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

A successful second-round due diligence

A "fatal flaw" discovered during due diligence

The completion of a term sheet

The company passing all compliance checks

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

Angel investors conduct less formal due diligence than venture capitalists.

Angel investors typically invest larger amounts of capital.

Venture capitalists rarely conduct financial analysis.

Angel investors conduct more extensive due diligence than venture capitalists.

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

Financial analysis and projections

Conducting background checks on the company's management team

Customer and supplier interviews

Drafting investment documents and ensuring legal compliance

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

To determine the initial public offering (IPO) price

To structure the marketing strategy for a startup

To assess the risk and potential for success of an investment

To evaluate the company's branding

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

Accelerated investment growth

Financial losses and legal or regulatory issues

Better understanding of the company's market position

More favorable terms of investment

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

Both the founders and investors

Neither, as it is not necessary

Only the founders

Only the investors

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

After an informal conversation with the management team

Once a term sheet is signed with the company

Following the IPO

After a casual meeting with the company

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

To conduct the due diligence process

To lead the company's marketing strategy

To ensure legal compliance and protect rights and interests

To determine the valuation of the startup

When is the first round of due diligence typically conducted?

During the IPO process

Before committing to an investment

After the company goes public

After wiring the money

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

Environmental and Social Due Diligence

Technical Due Diligence

Deeper Market Due Diligence

General Market Diligence

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