Raising Capital 2005 Edition David E. Vance - Solutions

How is a debenture SBIC organized? Where does it get funding?What are the implications for the entrepreneur?
How can a company's industry be used to determine whether it will be more successful pitching to an SBIC or a venture capital firm?Setting aside the issue of investment size, would a biotech company be more successful pitching to a venture capital fund or an SBIC?What is the basis of your answer?
What is the average SBIC investment? What percentage of SBIC capital is for initial investments and how much for follow-on investment?
Where do SBIC's fit in the overall spectrum of capital sources in terms of risk, reward, size of investment and stage of development?
15. What are NASAA Policy Guidelines? Why are they important? What are eight guidelines that most companies must follow and give a brief description of each?
14. What are the advantages of a DPO? What are the disadvantages of a DPO?
13. What are the issues surrounding a Direct Public Offering (DPO) by an issuer? What are the mechanics of a DPO? What types of companies are most likely to succeed with a DPO?
What is a Dutch Auction? What are the mechanics of a Dutch Auction? What are the benefits of a Dutch Auction to an entrepreneur?
What are some of the regulatory issues involved with a public offering over the Internet? How might an entrepreneur address such issues?
Can securities issued in a small public offerings be distributed the same way as those in a traditional IPO? Why or why not?
Are audited financial statements required for a Regulation D, Rule 504 offering? Are audited financial statements required for a Regulation A offering? Are audited financial statements required for an SB-1 offering? If so, what? Are audited financial statements required for an SB-2 offering? If so,
How much money can be raised through a Regulation A offering?How much can be raised through an SB-1 offering? How much can be raised through an SB-2 offering?
How does the SEC define a small business issuer for purposes of an SB-1 or SB-2 registration.
What is meant by "testing the waters?' What federal regulation allows testing the waters?
What is the coordinated review program? What are the implications of the coordinated review program for the entrepreneur?
What is a SCOR Form? What is it used for? Who created it? Why?
What are the three federal regulatory options for a small public offering?
What are the benefits of a small public offering as compared to a private placement?
Where does a small public offering fit into the entire spectrum of capital sources? When might an entrepreneur consider a small public offering?
What is going private? Why do companies do it?
What is a lock-up agreement? Why do underwriters generally insist on a lock-up agreement?
What types of criteria are there for listing on public exchanges? Is there any significance to differences in criteria among exchanges?What are the costs of listing on an exchange?
How much should an entrepreneur expect to pay in investment banking fees for and IPO? What might make fees higher or lower?
What is an IPO road show? What is its objective? What are the mechanics of the road show? Where does it go? How many shows might an issuer expect and over what period of time?
What are the main steps in taking a company public?
What are two methods and issuer can used to estimate the offering price of a stock? What are the mechanics of each method? How can a stock's price range be estimated?
In regards to an initial public offering, what does an underwriter do?How does an underwriter generate his or her fee?
What is an investment banker? What types of services do investment bankers provide?
Are there any statutory size criteria before a company can go public?Is there threshold pre-IPO revenue above which companies are more likely to succeed? What else might increase post IPO success?
Of the hundreds of thousands of companies in the country, about how many go public each year? What has the size of the average public offering?
What does "going public" mean? What are the advantages of going public? What are the disadvantages of going public?
What should a company's strategy be with regard to state securities laws?
What are twelve common merit review standards? What do they mean?
What is the difference between a regulatory scheme based on disclosure and one based on merit review? Who uses which scheme?
What is federal pre-emption? Describe five circumstances in which state securities laws are pre-empted by federal securities law.
What are Blue Sky laws? What is the relationship of Blue Sky laws to federal securities law?
What is an accredited investor? List eight categories of accredited investors with brief descriptions of each.
What is a private placement? How does it differ from a public offering? List five rules or regulations govern the sale of securities in a private placement.
List three forms of registration for publicly traded securities and describe when each is used.
List three exemptions from federal securities law.
What are two circumstances under which securities law impose liability on the issuers of a security?
What is a security? Give four examples of securities.
What is a term or deal sheet? When will it make its appearance? To what extent are the terms and conditions of the deal sheet negotiable?
If an investor expresses enough interest in a company to warrant a second meeting and request more detailed information, what should be included in this more extensive pitch piece?
What types of information should be contained in an initial pitch piece? How long should it be?
What is a financing round? What are some of the key milestones in a financing round? How long should an entrepreneur expect it to take from initial pitch to close a deal? What is meant by confidence building and what should an entrepreneur do with regard to confidence building?
What is the importance of sales? What are four things a company can do to assure an investor there will be a large and fertile market for its products?
What are meant by (i) a compelling, quantifiable business proposition, (ii) customers with real pain, (iii) customers with money to pay, and (iv) a market that is not overcrowded or over funded?
What is a scalable business model? What are some of the characteristics of a business model? How scalable does a model have to be to satisfy investors?
What can an entrepreneur do to assure an investor that he or she has what it takes to build a business? What are some of the personality traits an investor looks for in an entrepreneur?
What are seven threshold questions an investor considering a technology company will consider?
13. What is and investment agreement, sometimes called a stock purchase agreement? What are its purposes?
12. What are six rights an investor might demand in order to better monitor and control his or her investment in a portfolio company?Why would an investor ask for each of these rights?
1 1. What is dilution? Describe three anti-dilution strategies.
10. Name four exit related rights an investor might negotiate for.Describe each and their implication for the entrepreneur.
Suppose, in addition to a payoff at exit, an investor insists on convertible preferred stock or convertible bonds that pay dividends or interest prior to exit. What would be the impact on the amount of equity an entrepreneur should give up? How would it be computed?
What is payoff analysis and what is it used for? How would an entrepreneur or investor use payoff analysis to determine the share of equity an investor should get for a given investment?
What is the investor's objective in modeling a company? What are the mechanics of modeling? What are some of the most important variables to model?
If an entrepreneur were trying to value a company based on the value of similar companies, how would they do it? What is the formula for computing the growth rate of similar companies? How would revenue be converted to company value using this method? What are some of the problems in using this
What is the Discounted Cash Flow (DCF) method of valuation?What are the mechanics of preparing a DCF valuation? When might the DCF method be used instead of the EBITDA or revenue methods?
What is the revenue method of valuing a company? What are the mechanics of estimating value based on the revenue method? When might the revenue method be used instead of the EBITDA method?
What is the EBITDA method of valuing a company? What are the mechanics of estimating valued based on the EBITDA method?
What is the Term or Deal Sheet? Who usually prepares the Term or Deal Sheet? When will a Term or Deal Sheet appear in a discussion with an investor?
What are the variables that shape deal structure? What is the significance of each?
What are the steps in finding a venture capitalist and closing a deal?
Why is it important for an entrepreneur to identi9 the right venture capitalist for his or her firm versus the venture capitalist who offers the best deal? What are some of the factors to consider in choosing the right venture capitalist?
What are some of the issues an entrepreneur should consider when deciding whether an exit via IPO is appropriate?
What is meant by an exit strategy? List six exit strategies that a venture capitalist might use. Rank and discuss them.
What are the circumstances under which a venture capitalist be concerned with company valuation? Why? What are the implications for the entrepreneur?
What types of controls do venture capitalists use to minimize risk?What can be the adverse consequences of such controls for the entrepreneur?
How do venture capitalists generally structure their investments in portfolio companies? What types of securities do they want? Why?
What does a venture capitalist provide in addition to capital?
How does a venture capital firm get paid? How are profits split with its investors?
How are venture capital firms organized? Where does their capital come from?
What is the risk / reward profile of a venture capitalist? How does it fit within the spectrum of capital sources?
How is a venture capitalist different from an angel investor?
How many angel investors are there and how can an entrepreneur find them?
What is due diligence? What are angel investors trying to find out through due diligence? What are some examples?
What is a sales pipeline? How does it work? Why is it significant?
What is an exit strategy and why is one important, and to whom?
What are some of the financial characteristics an angel investor looks for in terms of return and length of investment?
What are some of the characteristics an angel investor looks for in a company and its products?
What are some of the characteristics an angel investor looks for in an entrepreneur?
What are the three most important criteria an angel investor is likely to consider in deciding whether they even take a meeting, let alone invest?
What does scalability mean and what are some examples of scalable and non-scalable companies?
What is an investible deal? How can both an entrepreneur and an investor share long term rewards? Isn't this a zero sum game where one party can only prosper at the expense of the other?
Where do angel investors fit in the risk-reward spectrum? At what stage in a company's life should an entrepreneur consider looking for an angel investor?
Who are angel investors? What is their typical profile? How much do they typically invest?
What kind of experience do investors expect of an entrepreneur and his or her senior management?
What elements should a marketing plan address?
Since revenue is usually the hardest variable to estimate, are there any probabilistic methods that can be used to gain a better understanding how to make sure profit targets are met?
Is there a way to estimate the required revenue to make a given profit? What should a company do if the required revenue is more than the revenue forecast?
How can focus groups be used to forecast revenue? How do focus groups work?
What is meant by multiple revenue streams? What are common revenue streams? How would you estimate revenue?
What is a business model? Why is it important? What questions does a business model answer?
What are the four phases of a product life cycle? What is price elasticity? What are the implications of these concepts?
Why is it important to assess a company's market? What are the four main types of markets? What are the implications of each?
What factors should be considered in determining how much capital to raise? What are the risks of trying to raise too much or too little capital?
What goals will an investor look favorably on, and what goals do they disfavor? Why?
What kinds of information does a company have to provide about individual sales to help the factor do the best job possible?

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Raising Capital 2005 Edition David E. Vance - Solutions

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