Quiz · Medium
Break-even, runway, unit economics (LTV, CAC, churn), valuation and dilution, plus lean startup ideas like MVPs, pivots and product-market fit.
A business has fixed costs of $30,000 per month. It sells its product for $50 with a variable cost of $20 per unit. How many units must it sell each month to break even?
600
1,500
1,000
2,500
. 600 comes from dividing by the price instead of the contribution margin.
Using the same numbers (price $50, variable cost $20, fixed costs $30,000), what is the break-even point in sales DOLLARS?
$30,000
$50,000
$75,000
$20,000
Contribution margin ratio = (50 - 20) ÷ 50 = 60%. Break-even sales = $30,000 ÷ 0.60 = $50,000, which matches 1,000 units × $50.
A startup has $600,000 in the bank and a net burn rate of $50,000 per month. What is its runway?
6 months
12 months
18 months
50 months
Runway = cash ÷ monthly net burn = 600,000 ÷ 50,000 = 12 months. Founders usually start fundraising with 6-9 months of runway left.
A subscription app loses 5% of its customers every month. On average, how long does a customer stay?
5 months
12 months
20 months
95 months
Average customer lifetime ≈ 1 ÷ monthly churn = 1 ÷ 0.05 = 20 months.
Customers pay $40 per month at a 75% gross margin and stay 20 months on average. Customer acquisition cost is $150. What is the LTV:CAC ratio?
5.3:1
2:1
3:1
4:1
LTV = $40 × 0.75 × 20 = $600. LTV:CAC = 600 ÷ 150 = 4:1. Using revenue instead of gross margin gives $800 and 5.3:1, which overstates value. About 3:1 is a common healthy benchmark.
An investor puts $2 million into a startup at an $8 million pre-money valuation. What percentage of the company does the investor own afterward?
25%
20%
16%
80%
Post-money = pre-money + investment = $8M + $2M = $10M. Investor share = 2 ÷ 10 = 20%. 25% wrongly divides by the pre-money valuation.
A founder owns 60% of a company before a funding round. In the round, new investors receive 20% of the company. What does the founder own afterward?
40%
48%
50%
60%
Everyone's stake is diluted by the same proportion: 60% × (1 - 0.20) = 48%. Subtracting 20 points (to 40%) is the classic mistake.
In Eric Ries's Lean Startup method, a minimum viable product (MVP) is:
The simplest version that lets the team test key assumptions with real customers and learn
The cheapest version of the final product sold at a discount
A finished product with every planned feature
A business plan approved by investors
The MVP's purpose is validated learning in a build-measure-learn loop, not maximizing revenue or polishing features.
A startup built a tool for restaurants, but data shows food trucks use it far more, so it changes its target customer. This is a:
Pivot
Exit
Bootstrap
Spin-off
A pivot is a structured change in strategy (customer, problem, channel or business model) based on what the team learned, while keeping the product's core.
A founder estimates the total worldwide demand for a product, then the portion her business model can reach, then the share she can realistically win in a few years. These three numbers are:
CAC, LTV, ARPU
Seed, Series A, Series B
Fixed, variable, marginal cost
TAM, SAM, SOM
Total Addressable Market, Serviceable Available Market and Serviceable Obtainable Market. Investors trust a bottom-up SOM more than a big top-down TAM.
Why do many small business owners form an LLC instead of operating as a sole proprietorship?
LLCs never pay any taxes
LLCs can issue stock on public exchanges
LLCs protect owners' personal assets from most business debts and lawsuits
LLCs do not need to keep any business records
Limited liability is the main benefit. A sole proprietor is personally liable for business debts. By default, LLC profits still pass through to the owners' tax returns and are taxed there.
What usually distinguishes venture capital from angel investment?
VCs invest other people's money from a fund, usually in larger, later rounds; angels invest their own money, often early
Angels always invest more money than VCs
VCs do not take equity
Angel investors are government agencies
Angels are wealthy individuals writing smaller early checks. VC firms raise funds from limited partners and expect very large returns from a few winners.
Which sign best suggests a startup has reached product-market fit?
The founders love the product
A large launch-day spike in sign-ups
Customers keep using it, retention flattens, and growth comes largely from word of mouth
The company raised a big funding round
Product-market fit shows up in retention and organic demand. Launch spikes and funding rounds can happen without real, lasting demand.
