Angel and VC funding

A vibrant illustration of angel investors discussing with startup founders in a modern office space, incorporating elements of finance and technology.

Master Angel and VC Funding

Test your knowledge about the world of angel and venture capital funding with this engaging quiz! Whether you're a startup founder, an aspiring investor, or simply curious about the financing landscape, this quiz will challenge your understanding and deepen your insights.

10 questions covering key concepts
Mix of multiple choice and checkbox formats
Learn about common pitfalls and strategic insights

10 Questions2 MinutesCreated by FundingScout452

Mix and match the term and its correct definition [Check all that apply]

Angel investors - raise money from institutional investors

VC - Experienced, accredited investors that invest their own money

Valuation - worth assigned to a company

Equity - share of ownership in the business received by an investor in exchange for money

Pro rata or preemptive rights - Option to keep the same % of ownership when new shares are issued at a subsequent round of financing

Vesting - process by which you “earn” your stock over time, much like you earn your salary

Term sheet - Non-binding outline of the terms and conditions in which an investment is to be made

Select the statement that is FALSE

The higher the probability of the success scenario, the higher the valuation of the startup

With every round of equity financing, new shares are issued

With every round, ownership stake of existing shareholders is reduced

Founders are the only ones that sell equity at each financing round

Which of the following statements about convertible notes are true? [Check all that apply]

Convertible note is a type of debt

VCs use unpriced rounds aka convertible notes, almost exclusively

Converts to equity when any small amount of money is raised

Has a mandatory interest rate

Valuation cap guarantees minimum % of company if things go well

Have to close investors at the same time

Matures in 18-24 months

Which of the following statements about different term sheet elements is TRUE? [Check all that apply]

Anti-dilution provisions are designed to protect the investor from a situation where the company’s value drops post-investment, and more money is raised at a lower price than he paid

If the firm raises additional funding at a price below the VC’s price, the VC’s conversion price is increased to protect against dilution

Anti- Dilution protection comes out of founders shares

Reserved shares are the pool of shares reserved to be given to employees for incentives/compensation reasons

Option pool can be used to top off founder ownership to keep them incentivized if their original stake gets too diluted out

VCs often let founders own their share of the common stock in the company free and clear

Which of the following statements is FALSE? [Check all that apply]

Often friends and family rounds are common stock deals

VCs care the most about option pool and investment amounts

SAFE deals have no maturity dates or interest

SAFE deals are a type of debt

VCs care the most about pro rata rights, board control and liquidation preferences

Which of the following statements about angel funding are TRUE? [Check all that apply]

Angel funding is generally, pre-seed, seed or Series A

Typical angel deal size is $1-2M

Most angel investors seek 3-5X and 22% IRR at the very minimum

Angel investors prefer SAFE deals

Typical exit time frame is 2-3 years

They need pre-money valuation of $3-5M (typically less than 10)

What are common angel deal mistakes/ red flags? [Check all that apply]

Which of the following is a difference between angel and VC financing?

Angel funding has more complicated terms

Angel funding is more expensive than VC funding

Angels are willing to take on more risk than VCs

Angels are likely to invest in multiple rounds of financing unlike VCs

Angel and VC funding

Master Angel and VC Funding

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