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Bootstrapping and Crowdfunding for Resources in Entrepreneurship MCQ

Which of the following is a common crowdfunding mistake?

Too many updates to your backers, flooding them with too much information to make decisions.

Putting a project on multiple crowdfunding sites at the same time.

Not having enough presence on social media, limiting your exposure to potential backers.

Not “going with your gut,” but instead listening to “the crowd”.

Answer

Correct Answer: Not having enough presence on social media, limiting your exposure to potential backers.

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Which of the following is true about crowdsourcing?

Like crowdfunding, crowdsourcing is a form of bootstrapping, because it is a valuable method of saving money.

Crowdsourcing works by drawing on small contributions from a large number of people to fund entrepreneurial ventures.

Crowdsourcing focuses on different ways of raising capital for new ventures.

Crowdsourcing is effectively a digital form of conducting a focus group.

Answer

Correct Answer: Like crowdfunding, crowdsourcing is a form of bootstrapping, because it is a valuable method of saving money.

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The increase in value or ownership interest created as a result of hard work is called ______.

bootstrap value

sweat equity

internal financing

part-time equity

Answer

Correct Answer: sweat equity

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Crowdcube, Circle Up, and OurCrowd are examples of what type of crowdfunding site?

not-for-profit crowdfunding

independent crowdfunding

equity crowdfunding

high-tech crowdfunding

Answer

Correct Answer: equity crowdfunding

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Which of the following is a common bootstrapping strategy?

Using personal credit cards to avoid formal bank loans.

Offer discounts to early customers to ensure a consistent cash flow.

Borrow from friends and family at low interest rates.

Give up your day job in order to focus on the startup full time.

Answer

Correct Answer: Offer discounts to early customers to ensure a consistent cash flow.

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______ is the process of raising capital for a new venture from a large audience, typically through the Internet.

Crowdfunding

Sweat equity

Crowdsourcing

Entrepreneurial practice

Answer

Correct Answer: Crowdfunding

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Manny’s Cookies, LLC wants to launch a Kickstarter Campaign to crowdfund a new product line. All backers who fund the project will receive 1% equity for each US$1000 funded, up to a total of 5% equity. Kickstarter has told Manny’s Cookies the project will not be allowed because it violated the Kickstarter rules. Which rule was violated?

Kickstarter does not allow monetary rewards or equity in a company as incentive to back a project.

Only startups can use Kickstarter, not established companies.

Only companies that are incorporated, not limited liability companies, can launch projects on Kickstarter.

The project was not honestly presented.

Answer

Correct Answer: Kickstarter does not allow monetary rewards or equity in a company as incentive to back a project.

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In the ______ model of crowdfunding, funds are offered without the expectation of a direct return for the funding.

patronage

lending

reward-based

investor

Answer

Correct Answer: patronage

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Which of the following is the best definition of bootstrapping?

The increase in value or ownership interest created by someone as a result of hard work.

A context for crowdfunding which describes the financial support given by backers without any expectation of a direct return for their donations.

Using the Internet to attract, aggregate, and manage ostensibly inexpensive or even free labor from enthusiastic customers and like-minded people.

The process of building or starting a business with very little funding or capital or virtually nothing at all.

Answer

Correct Answer: The process of building or starting a business with very little funding or capital or virtually nothing at all.

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Which of the following is true about the type of people who tend to back crowdfunding campaigns?

Women are more likely to back projects than men.

Project backers tend to have an annual income over US$100,000.

Project backers tend to be between the ages of 35–49.

Project backers usually get stock ownership in exchange for their backing.

Answer

Correct Answer: Project backers tend to have an annual income over US$100,000.

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What is the purpose of bootstrapping?

To provide customers with a minimum viable product.

To save money in creative ways.

To enable strategic partnerships with suppliers.

To encourage entrepreneurs to network with as many people as possible.

Answer

Correct Answer: To save money in creative ways.

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Which of the following is considered to be an advantage of crowdfunding?

There are no costs associated with crowdfunding.

Because it is online, crowdfunding is a quick and easy process.

Crowdfunding allows you to keep money within your own community through localized small-amount funding.

It can provide you with an idea of the level of enthusiasm and interest in your product or service before launch.

Answer

Correct Answer: It can provide you with an idea of the level of enthusiasm and interest in your product or service before launch.

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In the ______ model of crowdfunding, funds are offered with the expectation the money will be repaid.

patronage

lending

reward-based

investor

Answer

Correct Answer: lending

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______ enables you to attract early customers and allows you to test your ideas at very little cost.

Prototyping

Crowdfunding

Bootstrapping

Entrepreneurship

Answer

Correct Answer: Crowdfunding

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Kickstarter is an example of a crowdfunding site in the ______ model.

patronage

lending

reward-based

investor

Answer

Correct Answer: reward-based

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Tick Correct statement about Sweat Equity.

Investors who earn an annual income of more than $200,000 or have a net worth of more than $1 million.

A non-monetary investment that increases the value or ownership interest created by the investment of hard work for no compensation.

A crowdfunding model where backers do not expect any direct return for their donation or investment.

None of these

Answer

Correct Answer: A non-monetary investment that increases the value or ownership interest created by the investment of hard work for no compensation.

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which model that involves rewarding backers for supporting a project.

Reward-Based Crowdfunding

Sweat Equity

Angel Investor

Accredited Investors

Answer

Correct Answer: Reward-Based Crowdfunding

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______ model where backers do not expect any direct return for their donation or investment.

Lending Model

Investor Model

Equity Crowdfunding

Patronage Model

Answer

Correct Answer: Patronage Model

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A crowdfunding model where funds are offered as loans with the expectation that the money will be repaid is known as?

Lending Model

Investor Model

Equity Crowdfunding

Patronage Model

Answer

Correct Answer: Lending Model

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A crowdfunding model that gives backers an equity stake in the business in return for their funding.

Lending Model

Investor Model

Equity Crowdfunding

Patronage Model

Answer

Correct Answer: Investor Model

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which of correct statement Equity about Crowdfunding?

A crowdfunding model where funds are offered as loans with the expectation that the money will be repaid.

A form of crowdfunding that gives investors the opportunity to become shareholders in a company.

A crowdfunding model where funds are offered as loans with the expectation that the money will be repaid.

None of these

Answer

Correct Answer: A form of crowdfunding that gives investors the opportunity to become shareholders in a company.

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Which process of using the Internet to attract, aggregate, and manage ostensibly inexpensive or even free labor from enthusiastic customers and like-minded people ?

Equity Crowdfunding

Lending Model

Crowdsourcing

None of these

Answer

Correct Answer: Crowdsourcing

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Crowdfunding is the process of raising funding for a new venture from a _______ (the “crowd”), typically through the Internet.

Small audience

Medium audience

large audience

None of these

Answer

Correct Answer: large audience

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The process of building or starting a business with no outside investment, funding, or support is known as.

Uncertainty

Bootstrapping

Functionality

None of these

Answer

Correct Answer: Bootstrapping

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