1. A founder should be able to explain to venture capitalists how her frim will earn and sustain high gross margins in a large market.
True
False
2. Ideal investors in VC funds are money market mutual funds because people use these funds for transactions and sources of liquidity.
True
False
3. According to Berkery the most efficient way of valuing a new venture is to discount future profits back to the present using the company’s cost of debt as the discount rate.
True
False
4. According to Berkery it is not wise for a limited partner to make all of her VC investments in one year. It makes more sense to spread the fund’s investments out over time since the VC market is cyclical and this reduces the chance of hitting the bottom of a cycle.
True
False
5. It is common for a VC fund to have investments of up to 25 different companies. A few large winners can easily offset the losers and sideways deals.
True
False
6. The funds invested by limited partners in a VC fund are generally invested by the General Partners over a 1-5-year horizon. Sometimes investments are made in the same company in different funding series sometimes in other companies. After about five years when funds have been fully invested the payout to the limited partners may begin as companies in the fund go public or are acquired.
True
False