Leach TB Chap11 Ed3

Leach TB Chap11 Ed3 - CHAPTER 11 PROFESSIONAL VENTURE...

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CHAPTER 11 PROFESSIONAL VENTURE CAPITAL True–False Questions T. 1. In addition to having personal financial stakes in their portfolio of investments, professional venture capitalists have raised funds from other investors to invest in the portfolio. T. 2. The establishment of the Small Business Administration was the first major government foray into venture investing. T. 3. Created by the Small Business Administration, Small Business Investment Companies possess important tax advantages and were eligible to borrow amounts up to four times their equity base from the government. F. 4. Initially, Small business Investment Companies access to borrowed funds appeared attractive. This was because venture investing and debt service commitments are an ideal mixture of financing for start-ups. T. 5. Internet financing led the record level of venture investing in the 1999-2000 time period. F. 6. Two and twenty shops refers to investment management firms having a contract that gives them two percent carried interest and 20 percent of assets annual management fee. F. 7. When the venture fund calls upon the investors to deliver their investment funds, it reflects the deal flow. T. 8. The deal flow reflects the flow of business plans and term sheets involved in the venture capital investing process. T. 9. In the venture investing context, due diligence describes the process of investigating a potentially worthy concept or plan. F. 10. The summary of the investment terms and conditions accompanying an investment proposed by the venture capitalist is known as the statement of strengths and weaknesses. T. 11. Most venture investing came from wealthy individuals and families prior to World War II. 78
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Chapter 11: Professional Venture Capital F. 12. The beginning of professional venture capitalists began with the formation of American Research and Development in 1966. T. 13. In 1958 the Small Business Administration created Small Business Investment Companies. T. 14. “Carried interest” is the portion of profits paid to the professional venture capitalist as incentive compensation. F. 15. The term “capital call” refers to the flow of business plans and term sheets involved in the venture capital investing process. T. 16. Professional venture capital, as we know it today, did not exist before World War II. F. 17. The first major government foray into venture investing came with the formation of the Small Business Administration (SBA) in 1947. T. 18. The American Research and Development (ARD) company was formed in 1946. T.
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This note was uploaded on 12/05/2009 for the course FIN Fin 595 taught by Professor Shabbir during the Spring '09 term at CSU Dominguez Hills.

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Leach TB Chap11 Ed3 - CHAPTER 11 PROFESSIONAL VENTURE...

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