Answer to Question #285749 in Economics of Enterprise for Charlton

Question

31. Explain what is meant by the term “angel investor.” At what stage of development is the technology entrepreneur most likely to attract angel investors?

32. What does the average venture capitalist seek in the technology ventures they invest in?

33. What is the role of a private placement memorandum (PPM) in establishing and promoting a financing deal?

34. Explain how the U.S. Securities and Exchange Commission regulates investing in private technology ventures. What options are available to the technology entrepreneur to seek private equity financing?

35. How does investment in a private equity financing lead to dilution of a founder’s overall percentage of ownership?

Answer 1

31)An angel investor is a person who invests in a firm or a business startup in exchange for convertible debt or equity in the company. Angel investors typically fund start-ups in their early stages, also when most other investors are hesitant to back them financially.

32)A company with a strong management team, a vast prospective market, and a one-of-a-kind product or service that offers a significant competitive advantage as their success is based on the factor in order to reap profits on investment.

33) it's a legal document prepared by a company management to specific target investors in selling stock .it provides information on investment to target investors as well as attract investors.

34)First, it can be difficult to liquidate holdings in private equity because, unlike public markets, a ready-made order book that matches buyers with sellers is not available.

Options available are sell of debt instruments 35)When an investor's equity ownership in a company declines due to future equity issuances, this is known as dilution. This means that as more investors put money into the company, the founders' share of ownership is dimished.