How To Teach An Entrepreneurial Finance Course At Universtain Hall Of Fame

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1 UMBC UGC New Course Request: ENTR 330: Entrepreneurial Finance Date Submitted: 3/6/2015 Proposed Effective Date: Fall 2015 Dept Chair or UPD Other Contact Name Phone Dept George Karabatis Director ENTR Minor x53940 Information Systems Vivian Armor x55740 Alex. Brown Center for ENTR COURSE INFORMATION: Course Number(s) ENTR 330 Formal Title Entrepreneurial Finance Transcript Title ( 30c) Entrepreneurial Finance Recommended Course Preparation Prerequisite NOTE: Unless otherwise indicated, a prerequisite is (ENTR 200 with a grade of C or better) AND (ENTR 201 with a grade of C or better) assumed to be passed with a D or better. Credits 3 Repeatable? Yes No Max. Total Credits 3 This should be equal to the number of credits for courses that cannot be repeated for credit. For courses that may be repeated for credit, enter the maximum total number of credits a student can receive from this course. E.g., enter 6 credits for a 3 credit course that may be taken a second time for credit, but not for a third time. Please note that this does NOT refer to how many times a class may be retaken for a higher grade. Grading Method(s) Reg (A-F) Audit Pass-Fail PROPOSED CATALOG DESCRIPTION (no longer than 75 words): This course focuses on the finance and start up considerations that every entrepreneur must face. It is designed for students with a continued interest in the inter workings of a start up. The purpose of this course is to teach how to properly plan, finance, and maintain a healthy entrepreneurial venture, with an emphasis on the single most critical aspect (outside of the idea itself), which is the strength of its financial research, plan, and forecast. RATIONALE FOR NEW COURSE: a) Why is there a need for this course at this time? The ENTR 330 course focuses on a vital topic for any entrepreneur: how to finance a startup, which is an issue that many ENTR Minors have been asking for. Currently, ENTR minors have been informally asking local businessmen and the entrepreneur-in-residence on how to finance their ventures. As there is no other course in the Minor that deals with financing a startup, this course will systematically provide answers to this vital question of the minors. In addition, the ENTR Minor is witnessing an increase in the number of students who have been asking for a larger variety of ENTR electives. This course fulfills this gap and will serve the over 100 students who have declared the ENTR Minor. b) How often is the course likely to be taught? The plan is to start offering it in Fall 2015, and then once every subsequent year. c) How does this course fit into your department's curriculum? ENTR 330 is a course on skills beyond the level of two core courses of the Minor, namely, ENTR 200 and ENTR 201. It further fills a knowledge gap on financing methods, procedures, and plans for startup companies. It is designed to be an elective at the junior level. It enhances the ENTR curriculum and makes it more complete for the minors. d) What primary student population will the course serve? Undergraduate students who have declared the ENTR Minor (currently just over 100). The course will be also open to any majors and minors from other disciplines who are interested in entrepreneurship. We anticipate the enrollment to be around students. e) Why is the course offered at the level (i.e., 100, 200, 300, or 400 level) chosen? This course is designed to be offered at the 300 level to attract students who have already had some preparation and knowledge of entrepreneurship. The course delivers knowledge beyond the fundamentals (i.e., higher than the 200 level) as an upper-level elective course, and it is designed for students with some prerequisite knowledge who want to advance into an upper-level elective and learn entrepreneurial finance. f) Explain the appropriateness of the recommended course preparation(s) and prerequisite(s). This course has two prerequisites: ENTR 200 and ENTR 201. Both prerequisites constitute the core courses of the ENTR Minor and provide the

2 foundations that any student should have before taking an upper-level elective of the Minor. The proposed course, ENTR 330 builds upon both ENTR 200 and ENTR 201 and requires students to have successfully taken both prerequisites with a grade of C or better, to ensure they are well-prepared for the material, rigor, and content of ENTR 330. g) Explain the reasoning behind the P/F or regular grading method. The ENTR 330 course is designed as a regular 3-credit course with several readings and assessments throughout the semester. As such, it fits to be a course with a regular letter grading system ( A through F ). h) Provide a justification for the repeatability of the course. Based on the number of students who have declared the ENTR Minor, the enrollment levels in other upper-level ENTR elective courses, and a definite demand for the content of this course conveyed to us by ENTR minors we think that offering the course once a year will be most appropriate for students. ATTACH COURSE OUTLINE (mandatory): UMBC ENTR 330 Entrepreneurial Finance Instructor: Jason P. Pappas Managing Partner Antson Capital Partners, LLC Mobile: [email protected] [email protected] Education: B.A. in Economics & Political Science, Yale University, 1990 J.D. with focus on taxation, University of Maryland School of Law, 1998 Course Description: This course focuses on the finance and start up considerations that every entrepreneur must face. It is designed for students who have a continued interest in understandings the inter workings of a start up. The purpose of the course is to teach what is needed to properly plan, finance and maintain a healthy entrepreneurial venture. It is also designed to recognize how critical the financial planning of an enterprise is and that the idea is only half the battle. The single most critical aspect of any entrepreneurial venture (outside of the idea itself) is the strength of its financial research, plan and forecast. The course is divided up into six topic areas: 1. Basics of entrepreneurial finance and related financial statements 2. Start up hurdles and requirements 3. Financing vehicles and options 4. Valuation methods 5. Basic start up financial modeling 6. Pitching and presenting the start up Learning Objectives: Understand what is needed to form, finance and pitch your entrepreneurial venture. Learn how to read the basic financial statements of any business. Discover what are the considerations you need to contemplate when forming your company. Understand the various options for financing your company at each of its stages. Learn what are the advantages and disadvantages to each of the financing options. Learn how to realistically value your company and why that is critical to any business plan. Learn how to create a pro forma for the financial projections of the company and how that drives your decision making process. Figure out how to staff a venture and who you need to advise you along the way. Understand how to package the financials to potential investors and create compelling pitch material. Experience the stress and pressure of pitching your venture.

3 Prerequisites: ENTR 200 and ENTR 201 Required Reading: The Entrepreneurs Guide to Financial Statements By David Worrell, Santa Barbara, CA: ABC CLIO, Art of the Start by Guy Kawasaki, New York, NY: Penguin Group, Venture Deals by Brad Feld & Jason Mendelson. Hoboken, NJ: John Wiley & Sons, Required Resources: Instructor will provide appropriately redacted copied of Antson Capital developed pitch books, business plans and financial models to use a teaching tool and resource guide for the students. Required Watching: Students will periodically be assigned episodes of CNBC s The Profit and Shark Tank to watch either On Demand or online. Additional Readings: Attendance: Miscellaneous articles and case studies to be provided Attendance is mandatory. Only absences excused for University recognized documented reasons would be allowed. It is the student s responsibility to provide appropriate documentation. Unexcused absences will be penalized at a rate of 1 overall grading point per absence. For further clarity, if the student earned 90 points from the grading rubric below and missed 2 classes, they will earn an 88 for the course or a B. Class Assignments/Presentations: Class Participation and Interaction o Students will be required to attend (see attendance policy above) and be prepared to actively participate in weekly class discussions. Periodic Quizzes o Students will receive periodic quizzes on materials assigned for class. Each student will be able to drop one of his or her quiz grades. An absence during the quiz results in a zero. Weekly Reflections o Students will be asked to submit a reflection of each class by the following morning. Each student will be allowed to miss two reflections the entire semester. Class Assignments/Presentations (cont d): Final Business Plan & Financial Model o The students will be asked to produce a financial business plan and model for their entity. This will be a project that will span most of the semester and will be done in a group format. There will be teams of 2 4 based on the size of the class and selected early in the semester. These teams will be responsible for selecting an entity/idea to plan and model and then producing the assignment. The group will receive the same grade for the plan and model. Final Presentation at the Retriever Tank o Students will be asked to present their business plan and financial model from the previous bullet point

4 Overall Grading Rubric: Grades: as the capstone assignment of the course. The Retriever Tank will simulate an actual pitch scenario for a typical entrepreneurial venture. Depending on availability, the Tank may include actual investors, bankers and/or attorneys for added realism. Each group will do the pitch and the group will all receive the same grade for the presentation. Class Participation: 5 points Weekly Quizzes: 25 points Weekly Reflections: 10 points Final Business Plan and Model 35 points Final Presentation: 25 points A: points B: points C: points D: points F: 0 59 points

5 Class Synopsis: Class 1 Class 2 Class 3 Class 4 Class 5 Class 6 Class 7 Introduction to Entrepreneurial Finance Tie in to ENTR 200 & 201 Course Expectations & Outcomes Financial Statements & Pro Formas I Balance Sheet Income Statement Statement of Cash Flow Financial Statements & Pro Formas II Pro Formas o Purpose o Modeling BASICS OF ENTREPRENEURIAL FINANCE CREATING YOUR COMPANY Start Up Considerations Legal Entities o Sole Proprietorship o Corporations o C corporations o S corporations o Limited Liability Companies o Partnerships Legal, Taxation & Liability Considerations Taxation Considerations Liability Considerations Equity Financing Categories o Friends & Family o Angel Investors o Venture Capital o Private Equity Considerations o Structure Classes/Preference Valuation Debt & Hybrid Financing Debt Financing o o Categories Friends & Family Commercial Loans SBA backed Facilities Considerations Collateral Guarantees Hybrid Financing FINANCING YOUR COMPANY

6 Class 8 Class 9 Class 10 Class 11 Class 12 Class 13 Class 14 Class 15 o Categories Convertible Debt Instruments Mezzanine Financing o Considerations Triggers VALUING YOUR COMPANY Valuation Methodologies Valuing Your Company o Methodologies Discounted Cash Flow Multiples Method Comparable Transactions Practical Valuation Applications Investor Considerations MODELING YOUR COMPANY Creating the Model Modeling Your Company o Creating the Model Pro Forma Methods Pro Forma Styles Staffing & Investor Considerations Staffing Considerations o Headcount and modeling o Advisors and mentors Investor Returns o Preferred Returns o Carried Interest o Equity Waterfalls PITCHING YOUR COMPANY Creating Pitch Documents Pitching Your Company o Pitch Documents Executive Summary Consolidated Business Plan Presentation Materials/Slides Presentations Strategies & Practice Investor Presentations o Significant Considerations o Mindset o Communication Skills o Final Project FINAL PRESENTATIONS The Retriever Tank I The Retriever Tank II

7 Course Policies: Assignments: Submissions are due in class on the specified dates. Late Policy: No late assignments/problems. Communication: Students are encouraged to send me (see above) Make sure the says ENTR 330 in the subject of the and it comes from a UMBC account. s sent to me from non UMBC providers (e.g. verizon.net, gmail.com, comcast.net, etc.) may be filtered out and never arrive in my mailbox. Re grading: I will review any graded exam or assignment if the student believes` the grade you received was not appropriate. The student will have one week after the graded assignment is delivered to the class, to return it to me with a written statement discussing why the item in question deserved a different grade. Please note that the entire assignment will be reviewed and the final assignment grade may be raised or lowered as a result of the review. Readings: Some material in the textbook will be assigned as reading materials. Students are expected to read the materials that will be discussed in the class before the class meeting. Cell phones and beepers: All cell phones and beepers must either be turned off or set to a silent method of operation (e.g., vibrating rather than beeping). If the student must answer a call, please leave the classroom. As with arriving late, if the student disrupts the class they will be asked to leave the classroom. Laptops/smartphones in class: Please refrain from using laptop/tablet/smartphone in class other than taking notes for the class. Students using a laptop will be asked to sit in the back of class as to not distract any students taking manual notes. Academic Integrity: By enrolling in this course, each student assumes the responsibilities of an active participant in UMBC's scholarly community in which everyone's academic work and behavior are held to the highest standards of honesty. Cheating, fabrication, plagiarism, and helping others to commit these acts are all forms of academic dishonesty, and they are wrong. Academic misconduct could result in disciplinary action that may include, but is not limited to, suspension or dismissal. To read the full Student Academic Conduct Policy, consult the UMBC Student Handbook, the Faculty Handbook, or the UMBC Policies section of the UMBC Directory. Acts of Academic Misconduct are defined as the following: Cheating: Knowingly using or attempting to use unauthorized material, information, or study aids in any academic exercise. Fabrication: Intentional and unauthorized falsification or invention of any information or citation in an academic exercise. Facilitating Academic Dishonesty: Intentionally or knowingly helping or attempting to help another commit an act of academic dishonesty. Plagiarism: Knowingly representing the words or ideas of another as one s own in any academic exercise, including works of art and computer generated information/images.

8 Students with Disabilities: UMBC is committed to eliminating discriminatory obstacles that disadvantage students based on disability. Student Support Services (SSS) ( is the UMBC department designated to receive and maintain confidential files of disability related documentation, certify eligibility for services, determine reasonable accommodations, develop with each student plans for the provision of such accommodations, and serve as a liaison between faculty members and students regarding disability related issues. If you have a disability and want to request accommodations, contact SSS in the Math/Psych Bldg., room 213 or at SSS will require you to provide appropriate documentation of disability. If you require accommodations for this class, make an appointment to meet with me to discuss your SSS approved accommodations.