Entrepreneurial Finance

Transcription

1 COURSE INFORMATION Division: SBE Term/period: Winter 2013 Instructor: Thomas Hellmann Phone: Office hours: By appointment Class meeting times: Tuesday and Thursday 11am 12:30pm Course duration: Jan 3 rd to Apr 4 th 2013 Classroom location: TBD COURSE DESCRIPTION The course is designed for a variety of student interests. It directly addresses the concerns of students wanting to become entrepreneurs in the near or more distant future. It provides tools to those students who want to be active on the investing side, such as working for banks, venture capital firms or corporate venture organizations. It will also be useful to anyone who expects to be interacting with entrepreneurs and private equity investors, be it as suppliers, accountants, strategic partners, consultants, customers or other. Finally, this course is meant for anybody with a curious mind and a willingness to combine serious analysis with creative thinking. The course is primarily based on a mix of lectures, case studies and exercises. We will also try to have some guest speakers and a few other varied classes. The details will be discussed in the first week of class The purpose of this course is 1. To introduce students to the topics of entrepreneurial finance. 2. To expose students to the variety of challenges faced by different types of entrepreneurs, in the process of seeking funding for their entrepreneurial ventures. 3. To integrate theoretical, applied and practice-based perspectives and to provide a symbiosis of alternative perspectives that aim to understand the same phenomenon LEARNING OBJECTIVES What will the students be able to do at the end of the course? 1. Students will be able to understand the complexities of raising funds for novel ideas. 2. They will know what information should be presented to investors in a business plan presentation. 3. They will be able to critically evaluate a business plan. 4. They will be able to generate financial projections for start-ups - 1 -

2 5. They will also know how to perform alternative valuations methods to assess the valuation and price of investment deals. 6. They will experience how to negotiate key terms within entrepreneurial teams, and how to prioritize contractual clauses in a term sheet negotiation. 7. They will learn to evaluate public policies towards the financing of entrepreneurs. 8. They will learn about how entrepreneurs pitch business ideas to investors ASSESSMENT SUMMARY Class Participation 25% Class Assignments 25% Midterm Exam 25% Final Exam 25% DETAILS Class participation Class participation is very important in this course, and accounts for 25% of the grade. I view class discussion as a way of learning from each other: you can learn a lot from listening to your fellow students; and you can learn a lot from thinking about the comments you want to make in class yourself. I often view my role not so much as an instructor but rather as a facilitator of what I hope will be very interesting discussions. I will take regular class attendance. You cannot possibly make very insightful remarks if you have not prepared for class. If you miss more than one class, this will impact your grade. If you miss more than three classes, you may lose all points for class participation. Excused-in-advance absence will have a lower impact on point losses than unexcused absences. This is meant to teach you an important business skill about never to missing a meeting without telling people about it beforehand. Finally, please don t come late or leave early: this is not only a matter of missing part of a class, it is also a matter of respect for your fellow students. However, if late, it is better to still join the class than miss it. Class assignments There will be a total of 7 individual homework assignments, worth 18 points in total, and two group assignments worth 7 points. Each individual assignment is worth 3 points, and the six best assignments will be counted. The first group assignment is worth 3 points, the second is worth 4 points. All assignments are due at 11am on the day of class. All assignments will be submitted via the electronic course platform. Any missed or late assignment is automatically worth zero points. Any requests for re-grading of homework have to be submitted and justified in writing. Grades can go up, remain the same, or go down in case of regarding

3 Mid-term and final exams The mid-term and the final exam are worth 25 point each. The mid-term exam will be held in class, currently scheduled for Thursday Feb 14 th (subject to change). The final exam will be held sometime in April. Anyone who misses the mid-term exam will automatically receive the final exam grade for the mid-term exam. Anyone that misses the final exam will automatically get zero points for it. There will be no make-up mid-term or final exam. Anybody that misses both mid-term and final exam automatically fails the course. COURSE RESOURCES AND MATERIALS Reading Materials: 1. Introduction to Private Equity and Venture Capital 2. How Venture Capitalists Evaluate Potential Venture (HBS ) 3. Hardina Smythe, Harvard Business School The Plan, Chapter 17 of Technology Ventures: From Idea to Enterprise, 2nd Edition, Richard Dorf and Thomas Byers 5. Assigning Value, Chapter 4 of Venture Capital, Private Equity, and the Financing of Entrepreneurship by J. Lerner, A. Leamon and F. Hardymon, Wiley 6. ZipCar: Refining the Business Model, HBS A Note on Valuation of Venture Capital Deals, Stanford Study E Athleta, Harvard Business School Deal Structuring, Chapter 5 of Venture Capital, Private Equity, and the Financing of Entrepreneurship by J. Lerner, A. Leamon and F. Hardymon, Wiley 10. Yieldex (A), Harvard Business School Negotiating Equity Splits at UpDown, Harvard Business School The Founder's Dilemma, Harvard Business Review 13. Note on Private Equity Asset Allocation, Tuck School of Business at Dartmouth, Center for Private Equity and Entrepreneurship, # Yale University Investment Office: February 2011, HBS Angels in British Columbia, Harvard Business School Musings of a Queen, Mimeo UBC Other Learning Resources: Connect will be our electronic class website, please go to Technology Requirements: Students need laptops and calculators for their homework and exam. In class we have a no laptop and no smart phones policy

4 SCHEDULE Preliminary schedule, subject to change A more detailed schedule will be handed out at the beginning of class Provisional Schedule for COMM 486X 'Entrepreneurial Finance' (Please check class website for updates) # Date Topic Type Readings Assignment 1 TH 3-Jan Introduction 2 TU 8-Jan Introduction 3 TH 10-Jan Evaluating 4 TU 15-Jan Evaluating 5 TH 17-Jan Guest Guest 6 TU 22-Jan 7 TH 24-Jan 8 TU 29-Jan Introduction to PE & VC How VCs Evaluate : Hardina The Plan Assigning Value (Chapter 4) : ZipCar Evaluation of Hardina 9 TH 31-Jan Valuation Valuation of Venture Capital Deals 10 TU 5-Feb Valuation Exercise Exercise #1 Exercise #1 11 TH 7-Feb Valuation : Athleta Fin Proj for Athleta 12 TU 12-Feb Review Review 13 TH 14-Feb MIDTERM Exam TU 19-Feb BREAK WEEK TH 21-Feb BREAK WEEK 14 TU 26-Feb Term Sheets Deal Structuring (Chapter 5); part 1 15 TH 28-Feb Term Sheets Exercise Exercise #2 Exercise #2 16 TU 5-Mar Structuring deals Deal Structuring (Chapter 5); part 2-4 -

5 17 TH 7-Mar 18 TU 12-Mar 19 TH 14-Mar Entrepreneurial Finance Structuring deals Founder equity Founder equity Exercise 20 TU 19-Mar LPs and GPs : Yieldex : UpDown The Founder's Dilemma (HBR) The PE Cycle (Chapter 2) 21 TH 21-Mar LPs and GPs : Yale TU 26-Mar Guest Guest 23 TH 28-Mar Policy perspective 24 TU 2-Apr Review Review : Angels in BC 25 TH 4-Apr Presentations Exercise Musings of a Queen Prep Q for Yieldex UpDown exercise Prep Q for Yale 2011 Group: Prep Q for Angels in BC Group presentations - 5 -