AI2148 - Entrepreneurial Finance

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The easiest exam I’ve ever taken at KTH. The overlap between old exams and the new ones is staggering. Meaning that; if you do one or two exams (half-assed) you’ll be prepared for the exam. I finished in 45 minutes.

Exam 2022-10

Question 1 - Explain basic words from the course - (1p each)

Question 2 - Explain and give examples of 4 concepts - (1p each)

a)  Give three examples of milestones, each for a different part of the company. (3 p)

b)  Explain dilution, and how anti-dilution rights work

c)  Explain the properties of convertible preferred stocks and preferred terms. (3 p)

d)  Explain what syndication is and give three reasons to syndicate. (3 p)

Q3 - The VC Model (11p)

The VC-model is an important part of entrepreneurial finance. Please answer the following.

a) Please use the figure to explain the structure of the VC-model: the parts (A, B, C, and D) and the flow E (grey arrow from A to D) and the flow F (grey arrows from D to C). (6 p)

b) What is the time horizon of a venture fund, what are its two time periods called, and approximately how long are they? (3 p)

c)  Explain the management fee and the carried interest. (2 p)’

Q4 - Questions about staging - (7p)

a) Name two benefits of staging for the investor. (2 p)

b) Name one benefit of staging for the entrepreneur. (1 p)

c) Explain the main difference between staging and tranching. (2 p)

d) Explain the liquidation stack. (2 p)

Q5 - The four types of exits a start-up can do (12 p)

Describe the four main types of exit and their respective pros and cons. (12 p)

Re-Exam 2022-12

Question 1. (10 p)

Please answer the following questions briefly.

a) Name two of the columns that are found in the Capitalization Table. (2 p)

b) What are the two benefits of staging for the investor? (2 p)

c) What is the main benefit of staging for the entrepreneur? (1 p)

d) Explain what syndication is and give two reasons to syndicate. (2 p)

e) What is a Down Round? (1 p)

f) Explain Pro Rata and dilution. (2 p)

Q2 (10 p)

Please answer the following.

a) Give two examples of milestones, each for a different part of the company. (2 p)

b) Explain in detail the properties of convertible preferred stocks. (2 p)

c) One of the exit types is acquisition. Explain in detail this type of exit. What are the arguments for and against this type of exit, for the seller (investor and venture) and the buyer? (6 p)

Q3 (10 p)

The VC-model is an important part of entrepreneurial finance. Please answer the following.

a)  Give a detailed explanation of A, B, C and D in the structure of the VC-model. (8 p)

b)  Explain the management fee and the carried interest. (2 p)

Q4 (10p)

Investors, such as venture capital, FFF, business angels, and crowdfunding, differ in terms of their expertise, their deal generation, the investment securities they rely on and their corporate governance:

a)  Compare the four investors in terms of expertise. (4 p)

b)  Compare the four investors in terms of deal generation. (4 p)

c)  Compare the four investors in terms of investment securities. (6 p)

d)  Compare the four investors in terms of corporate governance. (6 p)