ENTR 302: Chapter 12

Which is true regarding funding for startup companies?

• Most businesses start without any formal investment.

• It is not possible to start a business without outside investment.

• Formal investment will be needed to make a successful company.

• People who have no money cannot start a business.

What is the name given to the process of building a business with very little, or no, funding?

• sweat equity

• bootstrapping

• patronage model

• crowdfunding

Jose is opening a small restaurant. On weekends, he works with his cousin to construct the tables, chairs, and counters that will go into the restaurant. What is this an example of?

• bootstrapping

• angel investment

• sweat equity

• crowdsourcing

Santana starts their company with computers that they found in an online marketplace and some office furniture from the basement of their parents’ home. This helps them reallocate funds to other areas of the company, rather than on supplies. This strategy would be considered which of the following?

• startup

• sweat equity

• penny pinching

• zero-based funding

Which refers to the process of raising capital for a new venture from a large audience, usually through the Internet?

• crowdfunding

• penny pinching

• crowdsourcing

• bootstrapping

What does crowdfunding help an entrepreneur source?

• talent

• intellectual property

• money

• labor

Wikipedia encourages its users to edit and update its free online encyclopedia. Which is this an example of?

• patronage

• equity

• crowdfunding

• crowdsourcing

An entrepreneur creates a video for social media stating the worthiness of their cause in order to attract volunteers to help get the organization started. What is this an example of?

• the lending model

• sweat equity

• the patronage model

• crowdsourcing

How does Kickstarter earn money?

• charging a percentage of the funds obtained from each successful project

• charging members a modest fee for posting their request

• using crowdfunding themselves

• listing themselves as a nonprofit and getting grants

Crowdfunding and crowdsourcing would both be considered which of the following strategies?

• formal fundraising

• bootstrapping

• angel investing

• penny pinching