Entrepreneurial Finance (IB / FI 320) Prof. Tommaso Saltini and Prof. Raffaella Colasurdo Area: Business Session C: 12 July 22 July Duration: 2 weeks Campus: Milan Course description To be entrepreneur you need a good business idea, right after, to start up and develop your idea you need capital. One of the most critical issues facing entrepreneurs is deciding how and when it makes sense to raise outside capital. This course teaches about the financing new entrepreneurial ventures, understanding investors and preparing for financing The course examines the entrepreneur s and the investor s perspective. Class participants will learn the fundamentals of the Entrepreneurial Finance, and the relevance of financial planning. In the first part of the course, Instruments, Players and Prospective, we will focus on the early stages of company development, identifying key questions, which challenge all entrepreneurs: if and how money should be raised; when should it be raised and from whom. The second part, Business Finance, key topics, is concerned with the nature of key financial statements such as Income Statements, Balance Sheets and Cash Flow Statements, and their roles to support our research of capital. The course teaches how to present key financials and business plan, to support our negotiation with investors and to give a value to our new or early stage business. Guest speakers, with entrepreneurial and consulting experiences, will introduce students to the principle of finance applied to business planning; case studies to facilitate understanding of financial issues focused on entrepreneurial ventures will be also presented. Main topics Financial Instruments and Sources of Finance Understanding Investors and Preparing for Financing Business finance, key topics Business Plan Prerequisites None
Learning goals / objective To become familiar with the basic notion of finance and financial planning. To become aware about the broad range of actors and opportunities to get financial resources Course requirements Students are expected to regularly attend class sessions and to actively take part in class debate and case discussions; Students are expected to be prepared on the assigned readings before the lectures; Students are expected to deliver one group assignment and present it to the class. Course readings and materials Slides will be distributed daily Recommended readings: OECD netfwd (2014), Venture Philanthropy in Development: Dynamics, Challenges and Lessons in the Search for Greater Impact, OECD Development Centre, Paris. Kohn H., Karamchandani A., Katz R., (2012); From Blueprint to Scale: The Case for Philanthropy in Impact Investing, produced by Monitor Group, in collaboration with Acumen Fund.. Kohler J, Kreiner T, Sawhney J, (July 2011); Coordinating impact capital: A new approach to investing in small and growing business. Santa Clara University, Aspen network of development entrepreneurs Borsa Italiana, Listing Guides: Strategic Plan Guide (2004, update 2013) Aswath Damodaran, online books, research and papers on valuations Pablo Fernandez: online papers and books on valuations Teaching methods Instructors will share own business experiences, working groups, guest speakers and field trips.
Evaluation and grading Attendance and class participation Group assignments + class presentation Final written exam 30 % of final grade 30 % of final grade 40 % of final grade. SCHEDULE FIRST PART - Instruments, Players and Prospective Lesson 1: Introduction to the course, why and how raising capital. Introduction and overview of the course: aims, organization, assessment Why Capital, context and preliminary assumptions New idea and need of capital - Students potential business idea, dreams & experiences in using resources to start up business Lesson 2: Financial Instruments and Sources of Finance Debt and/or Equity; Short, Medium and Long Term Lending Institutions and Equity Funds Types of Instruments from Debt to Equity Lesson 3: Understanding Investors and Preparing for Financing Think about to start up a business and to be an entrepreneur. Discussion with students about business ideas Lesson 4: Understanding Investors and Preparing for Financing Raising Capital, a wide range of investors categories Impact Capital and Venture Capital Venture Philanthropy, Financial and Social return
Lesson 5: Understanding Investors and Preparing for Financing Key issues to raise capital Capital Cycle: From innovative idea to IPO Different Fund Structures and Creative Forms of Support Stories and testimonies (video about interesting stories) Lesson 6: Understanding Investors and Preparing for Financing Investment Process, from Deal Flow to Exit Important remarks about impact and venture capital Case Studies Lesson 7: Starting up a business, financial prospective Starting up and getting to scale Philanthropist, Government and Investor prospective Four Stage for business development: Design, Validate, Prepare, Scale Lesson 8: Coordinating finance for small businesses Multiple form of investment, Business Angels, Accelerators and Incubators Crowdfunding Half day long (9.00 am 1.00 pm) visit to IT start-up center / incubator center and/or Borsa Italiana SECOND PART - Business finance, key topics During lessons you will prepare, following the professor, your own business plan to be presented to investors
Lesson 9: Introduction to financial prospects Overview of financial prospects: Income Statement, Balance Sheet, Cash Flow Income statement: Sales, Cost of Sales,Business seasonality (monthly quarterly) Profitability indicators Task: find an annual report of a listed company Lesson 10: Balance Sheet, Cash Flow and Financial Ratios overivew Net Working Capital; Net Financial Position Fixed and current assets; tangible and intangible assets Most common Balance Sheet reclassification: Net Invested Capital Cash Flow; Debt/Equity Lesson 11: Business Plan: Approach and building a (simple) Model Analysis of the annual report from task of previous lesson Assignment presentation: building a (simple) business plan Case study 1 presentation Lesson 12: Business Plan: Approach and building a (simple) Model Data preparation Frequently used functions Output, Formatting, Sensitivity Case study 2 presentation Lesson 13: Business Plan: Due diligence, Deal Structure and Business Evaluation overview Introduction to due diligence process: when, why, what
Business due diligence and other due diligence (legal, management, tax, financial, operational) Valuation methods: theoretical application Lesson 14 and 15: Business Plan: working groups Working groups on assignment preparation Visit to Banca Intesa StartUp Initiative Final written Exam Bio of the lecturers Tommaso Saltini Ph.D. and research fellow in management and finance, research focus in impact financing and entrepreneurial finance; venture capital and corporate finance advisor with a focus on the Middle East, North Africa and India; Office: ALTIS, Post-graduate School of Business & Society of UCSC, Via San Vittore 18, 20123 Milano Phone: +39 02 48517156 @: tommaso.saltini@unicatt.it Raffaella Colasurdo International working experience in business and financial advisory services; M&A Strategy, business planning and valuation analysis. Office: Via Vincenzo Monti 8, Milan Phone: +39 02 435781 @: raffaellacolasurdo@yahoo.it