FlexiQuiz - QAI - Module #14 Quiz

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

Drafting investment documents and ensuring legal compliance

Financial analysis and projections

Customer and supplier interviews

Conducting background checks on the company's management team

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

General Market Diligence

Environmental and Social Due Diligence

Deeper Market Due Diligence

Technical Due Diligence

When is the first round of due diligence typically conducted?

After wiring the money

During the IPO process

After the company goes public

Before committing to an investment

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

More favorable terms of investment

Accelerated investment growth

Better understanding of the company's market position

Financial losses and legal or regulatory issues

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

To evaluate the company's branding

To determine the initial public offering (IPO) price

To assess the risk and potential for success of an investment

To structure the marketing strategy for a startup

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

After a casual meeting with the company

After an informal conversation with the management team

Following the IPO

Once a term sheet is signed with the company

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

To determine the valuation of the startup

To conduct the due diligence process

To ensure legal compliance and protect rights and interests

To lead the company's marketing strategy

8. 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 conduct less formal due diligence than venture capitalists.

Venture capitalists rarely conduct financial analysis.

Angel investors typically invest larger amounts of capital.

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

The company passing all compliance checks

A successful second-round due diligence

The completion of a term sheet

A "fatal flaw" discovered during due diligence

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

Only the investors

Both the founders and investors

Only the founders

Neither, as it is not necessary

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