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CA Final Startup Company — practice questions

Explore 41 free Startup Company questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

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Startup Company questions and exercises with answers

Showing questions 1–30 of 41.

What does a VC receive for funding a young firm?Read the answer and worked solution →How does a lender differ legally from a venture investor?Read the answer and worked solution →Why is venture funding an expensive capital source?Read the answer and worked solution →Which funding round is the earliest, used to prove a new idea and often provided by friends, family and angels?Read the answer and worked solution →Which pair of rounds makes up early stage venture funding?Read the answer and worked solution →Companies use early stage venture capital mainly to achieve what goal?Read the answer and worked solution →Growth capital for a startup typically consists of which rounds?Read the answer and worked solution →A startup raises a small sum between two full venture rounds because its cash will run out early. This is calledRead the answer and worked solution →An early venture investor sells its shares to new investors in a later round. Which exit route is this?Read the answer and worked solution →In a venture capital fund set up as a partnership, what are the outside investors known as?Read the answer and worked solution →What role do general partners play in a VC partnership?Read the answer and worked solution →For most venture funds, the investing cycle before the focus shifts to follow-on investments lasts aboutRead the answer and worked solution →Limited partners promise a fixed sum to a venture fund that is initially unfunded and laterRead the answer and worked solution →Which pay mix is called the two and 20 arrangement?Read the answer and worked solution →Which of these is named as a type of venture capital investor?Read the answer and worked solution →Which factor do most venture capital firms cite as the most important in their investment decision?Read the answer and worked solution →Which measure mainly concerns a VC when assessing a deal?Read the answer and worked solution →Which kind of investor typically backs companies that already have proven revenue, unlike venture capital?Read the answer and worked solution →Founders who fund a venture with savings, family loans and credit card debt are practisingRead the answer and worked solution →Non-dilutive capital repaid as a share of monthly revenue is calledRead the answer and worked solution →Which option gives growth-stage technology firms working capital without significant equity dilution?Read the answer and worked solution →Besides funding, what do startup studios provide?Read the answer and worked solution →In media for equity, a startup receivesRead the answer and worked solution →The word angel in angel investing originally comes from which field?Read the answer and worked solution →Angel capital mainly fills the funding gap between which two sources?Read the answer and worked solution →Unlike venture capitalists, angel investors typically investRead the answer and worked solution →How does a founding angel differ from a business angel?Read the answer and worked solution →At the seed round, when the product is still a prototype, investors mainly rely onRead the answer and worked solution →Which round finds a startup with traction as VC firms join angels?Read the answer and worked solution →Which rounds fund expansion, acquisitions or IPO preparation?Read the answer and worked solution →

Worked practice questions

What does a VC receive for funding a young firm?

  1. A guaranteed repayment schedule
  2. A fixed rate of interest on the sum
  3. An equity stake in the business
  4. A charge over the firm's assets
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Correct answer: C. An equity stake in the business

Venture capital buys ownership, so the investor's return depends on the growth and profitability of the business rather than on contractual interest.

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How does a lender differ legally from a venture investor?

  1. A share of the final exit proceeds
  2. A board seat in the borrowing company
  3. Interest and repayment whatever the outcome
  4. Dividends that track profit growth
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Correct answer: C. Interest and repayment whatever the outcome

A lender holds a contractual claim to interest and principal, while a venture capitalist is a shareholder whose return depends on how the business performs.

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Why is venture funding an expensive capital source?

  1. Investors need very high returns
  2. Lenders charge penal interest
  3. Regulators levy a fee per round
  4. Legal costs exceed the sum raised
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Correct answer: A. Investors need very high returns

Because many ventures fail, venture investors require very high returns on the winners, which makes the money costly to the company.

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