Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
51. What is the characteristic of the reward model of crowdfunders?
a. investors provide financial support with no expectation of direct return
b. investors are given prizes for their financial support, such as product samples or
experiences
c. equity is exchanged for the contribution
d. funds are treated as loans
52. Crowdfunding can help you save money on marketing because it:
a. provides customer service automation
b. provides your customers with a free sample of your product
c. provides you with an idea of the level of interest in your product
d. provides all of these
53. Of the following, what best describes the value of crowdfunding?
a. Projects are easy to conduct.
b. There are various options to funds other than giving a part of the company away.
c. It is relatively risk free.
d. It is the easiest way to get worldwide recognition.
54. Financial support given by backers without any expectation of a direct return for
their donations is characteristic of the _____________ of crowdfunding.?
a. patronage model
b. lending model
c. reward model
d. investor model
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
55. What should be done with the product concept in order to conduct a successful
campaign?
a. Provide schematic designs or service examples so that the product is clear.
b. Offer samples of the product so that the investor can have a hands-on experience
with the product.
c. Test and refine the idea so that the product is clear and the investor knows what
problem the product solves.
d. Test the product with a survey or beta test prior to the campaign.
56. Giving backers an equity stake in the business in return for their funding is
characteristic of the _____________ of crowdfunding.
a. patronage model
b. lending model
c. reward model
d. investor model
57. Why is it important to talk to others who have used crowdfunding?
a. You will get a better idea of what to do and what to avoid in your campaign.
b. You can engage them in your own campaign.
c. You can gain valuable information about their product or service.
d. They may want to buy your business.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
58. Kevin is about to launch a crowdfunding campaign and posts a request on his
Facebook page, asking people to share their experiences on crowdfunding sites. What
element of conducting a campaign is Kevin observing?
a. set the right fundraising goal
b. practice the pitch
c. seek and accept advice
d. get the campaign started
59. Gerry tries out his pitch with people who have not heard of his product before. What
element of conducting a campaign is Gerry observing?
a. set the right fundraising goal
b. practice the pitch
c. seek and accept advice
d. get the campaign started
60. Greg is using a fundraiser site and is offering 10 shares of stock to those who
contribute a minimum of $100 to his product. What model of crowdfunding is Greg
using?
a. investor
b. patronage
c. reward
d. lending
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
61. Lorraine offers to give people a percentage of the profits earned from her theater
production as a reward for donating $100 to the production’s equipment. Kickstarter did
not approve her campaign because:
a. it was a theater production and not a product
b. she wanted to offer a financial reward
c. she was asking too much of an investment, given the reward
d. she was asking too little of an investment, given the reward
62. According to the textbook, which is the most established crowdfunding site?
a. Kickstarter
b. Quirky
c. Indiegogo
d. Rockethub
63. Which of the following is NOT one of the basic rules of the crowdfunding site
Kickstarter?
a. Projects must create something to share with others.
b. Projects must launch products within two months.
c. Projects must be honest and clearly presented.
d. Projects cannot fund-raise for charity.
64. One of the problems with the Coolest Cooler on Kickstarter was that:
a. the USB charger caused electric shocks to several customers
b. shipping was too expensive for more customers
c. supporters lost faith over delayed production
d. they crowdfunded on multiple sites, betraying community guidelines
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
65. Crowdfunding that gives backers the opportunity to become shareholders in a
company is called ______.
a. crowdsourcing
b. shared entrepreneurship
c. professional fund management
d. equity crowdfunding
66. According to the text, in the crowdfunding model, the ______ is everything.
a. formal proposal
b. video pitch
c. written description
d. sales pitch
67. As recent studies have shown, projects with spelling mistakes are how much less
likely to be successful than projects without?
a. 13%
b. 27%
c. 50%
d. 75%
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
68. The biggest problem experienced by successful crowdfunders includes:
a. underestimating the costs associated with manufacturing their products
b. manufacturing too many products without enough consumer demand
c. delays and setbacks in product delivery, and failure to deliver the promised rewards
d. manufacturing products that fail to meet consumer expectations for quality and
reliability
69. If you cannot convey your product or service idea to your audience of prospective
financial backers in a few short sentences, you should:
a. provide everyone with a detailed business plan document.
b. abandon your product or service idea.
c. spend time getting a clearer sense of the essence of your product.
d. remind your audience that they are missing out on a unique opportunity.
70. Crowdfunding entrepreneurs should set a funding target that is:
a. aggressive to signal confidence in the product or service for potential investors.
b. low and easy to outperform in order to generate buzz around the product or service.
c. realistic enough to attract backers but high enough to cover costs.
d. as high as possible to generate as much initial cash as possible to infuse into the
business.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
True/False
1. When borrowing from friends and family, it is better to treat the arrangement as a
formal loan.
2. Crowdsourcing would be the fastest way of raising financial capital for your business.
3. You would like to raise funds for a foodbank in your local community. Kickstarter
would be an excellent source for the initial funds.
4. In the investor model, crowdfunding backers will expect an equity stake in your
business.
5. In the patronage model, investors will contribute to your project with no expectation of
direct return.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
6. John is raising money on a crowdfunding site, and in return for contributions, offers to
let the contributor purchase prelaunch product. John is using a patronage model of
crowdfunding.
7. One of the advantages of crowdfunding is that the audience does not expect you to
have a good product pitch. They understand that you are in the early stages of your
product or service development.
8. It is important to be conservative in setting the financial goal in a crowdfunding
campaign.
9. According to the text, a disadvantage of bootstrapping and building up a business
piece by piece is that you’re less likely to generate a larger customer base.
10. Most entrepreneurs choose to seek out angel investors or other external investors in
the beginning.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
11. According to the text, crowdfunding is increasing in popularity all over the world.
12. Crowdfunding is a resource for talent and labor, and crowdsourcing is a resource for
for money.
13. When setting a funding goal, be aware of how much money you would like to have
rather than how much you will need.
14. Research has shown that the majority of crowdfunded projects are delivered later
than expected.
15. Crowdfunding has been used to raise billions of dollars for all kinds of industries.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
16. There is no time limit for trying to raise funds through Kickstarter.
17. Indiegogo is the largest global crowdfunding site.
18. Bootstrapping and starting slowly enables entrepreneurs to avoid any and all risk.
19. Backers invest solely on the merits of a product rather than their impression of the
entrepreneur involved with the product.
20. The first step entrepreneurs should take before starting a crowdfunding campaign is
to begin manufacturing the product.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
Essay
1. Imagine that you have developed a software application and want to raise money for
legal advice, filing initial business and regulatory forms, and funding your travel and
marketing expenses. Describe how you would fund these early efforts.
2. Imagine that you have developed a software application and are now ready to “open
shop.” Describe some of the penny-pinching techniques you would use to get your
business started.
3. Imagine that you have developed a concept for a wood chipper that will provide more
safety than current products. You have some rough designs but would like to use
Internet-based sources to develop these ideas into a prototype that can be tested. What
resources would you use, and how would you use them?
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
4. Imagine that you have just written a book on urban farming. You need money in order
to print and distribute your first printing. How would you use Internet-based resources
for this purpose?
5. Select a product that you might want to fund on Kickstarter. Explain the steps you
would take to make sure that your campaign fulfills the requirements of the Kickstarter
site.
6. Suppose that a friend of yours is considering crowdsourcing for a new smartphone
app. Since he is not a programmer, he needs help developing the software. However,
your friend has significant marketing outreach because he is in contact with the very
people who would be most likely to download and pay for the app. Describe the advice
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
you would give your friend, informing him of the advantages and disadvantages of
crowdsourcing for his project.
7. Compare the investor model of crowdfunding with the lending model. What are the
advantages and disadvantages of each for the entrepreneur?
8. Imagine that you have started a company that provides training in real estate,
focusing on house “flipping.” You are emphasizing the training aspect in your business.
Explain how you would use reward-based crowdfunding or crowdsourcing to quickly
expand your audience reach.
Instructor Resource
Neck, Entrepreneurship
SAGE Publishing, 2018
9. You are ready to start your crowdfunding campaign. Describe what you should do to
ensure a successful campaign.
10. Identify a project that could use crowdfunding and crowdsourcing. Identify the many
opportunities that would benefit from these online sourcing and funding sources.