Entrepreneurial Engineering – ELEC4445/GSOE9445

Quiz 7

1. in terms of funding, intellectual property (e.g. patents) fall under which category?

Asset cost

2. Explain in your own words how e-tags illustrate the 4th principle "collect early, pay late" [< 50 words]

E-tag providers have taken $58 million in $40 security deposits which are unlikely to ever be returned

3. Which of the following funding mechanisms impacts negatively the burn rate of a startup?

Debt funding

4. When an investor acquire equity in your startup company, the corresponding shares are normally

Newly created shares for the investors

5. The difference between common shares and preferred share is particularly important during bankruptcy. It is often the case then that the assets (if any) of a company are liquidated (sold) and the money returned to the shareholder. Explain in your own words the difference between common and preferred shares in that particular scenario [<50 words]

During a liquidity event, the owner of preferred shares are paid first at the agreed par value before the owners of common shares.

6 In return for an investment of $300,000 into the startup "Beyond Pink", investors received 600,000 new shares. What was the agreed pre-money valuation of "Beyond Pink"? Round your answer to the nearest dollar e.g. enter 123,000 for $123,000.2

585,000 ($300,000/600,000 * 1,170,000)

7. Which one of the following high-tech companies has also implemented a dual-share policy as mentioned in the Vox article "Mark Zuckerberg is essentially untouchable at Facebook”?

Google