Finance for Entrepreneurs

Assignment 1 25733 Finance for Entrepreneurs
Value 30% Due date: via turnitin in the subject Canvas site and by email to david.michayluk@uts.edu.au by midnight April 13, 2020
Students are expected to research the questions via any and all online resources. Please ensure you provide links to online sources in your references/appendix to provide proper attribution. Please submit an electronic copy via email. There are no page limits.
Part 1 Effects of COVID-19 on startups (10%)
You are living through a pandemic that is having effects on all aspects of life and will undoubtedly affect startups. Answer the following questions.
1. Explain what stage of startups are less likely and more likely to receive funding in the current crisis.
2. Which industries may be better performers than others in the near future and why?
3. Use Crunchbase.com and other sources to research the startup Xenex. Identify its value proposition, when it was founded and by whom, how it has been funded and provide some comments on its prospects.

Part 2 Financing when things go wrong (10%)
Use any sources to answer the following questions
1. Is a startup pivot considered to be a failure?
2. What is a down round?
3. How does an anti-dilution clause affect ownership in a down round? How do weighted-average and full ratchet anti-dilution clauses work? Provide an example to illustrate a down round with two different venture capital investments, one with a weighted average anti-dilution clause and one with a full ratchet anti-dilution clause.
Part 3 Founder and employee remuneration (10%)
1. What is meant by “skin in the game” for founders? Is this consistent with the Founder drawing a salary?
2. Describe different at least three different forms of equity that can be given to employees along with the pros and cons of each from the perspective of the startup and the employee.
3. What are the considerations from a startup perspective and from an employee perspective when designing remuneration to choose between a mix of salary and equity?
4. How would the mix between salary and equity differ between employee number 5 versus employee number 250?