Why Do Most People Launching a Start-Up Company Acquire Their

question 52

Multiple Choice

Why do most people launching a start-up company acquire their funds through the venture capital industry rather than through angel investors?

• A) Most entrepreneurs are not willing to relinquish the control of their business demanded by angel investors.
• B) Most entrepreneurs do not want the fees associated with investment by an angel investor.
• C) Most entrepreneurs do not need the expertise brought to a young firm by an angel investor.
• D) Most entrepreneurs do not have any relationships with individuals with substantial capital to invest.

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Definitions:

Overhead Rates

Ratios used to allocate indirect costs to products or services, based on a predetermined activity base such as labor hours or machine hours.

Machine-Hours

A measure of production time, referring to the total hours that machinery is operated in the manufacturing process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead to products based on a certain activity base.

Customizing Department

A specialized department in a company that modifies products to meet specific customer requirements or preferences.