Course: Management 698
Title: Entrepreneurial Finance
Instructor: Dr. David Y Choi
x: 8-2344 Office: Hilton 200B
Course Schedule: Mon & Wed 7:10 – 10:10 pm
Prerequisite: Finance 608 & Accounting 602
Textbook: Required: Case Book assembled by instructor (Get it at http://www.xanedu.com/login?PackId=266222). Course Pack Title: Entrepreneurial Finance, Summer 2007.
Required: Download all powerpoint presentations and papers from Blackboard and have them with you so you can take notes on them.
Required: Book: From Concept to Wall Street: A Complete Guide to Entrepreneurship and Venture Capital by Oren Fuerst & Uri Geiger
Office hours: TBD
Course Overview
Entrepreneurs often point to finance being the most important skill they lack. What complicates the matter further is that financial decision making in the context of new venture is different from materials taught in most finance courses. This course is aimed primarily at people who may be involved in an entrepreneurial venture at some point in their careers whether in a large organization, a turnaround situation, a management buyout, or a startup. This topic is also important to many of our students who will be involved in small business investments or venture financing, either as an entrepreneur or an investor. Needless to say, students interested in careers in venture capital, private equity, investment banking or banking would find this course very relevant.
In this newly-developed course, students will be introduced to financing issues and options from the vantage points both of the entrepreneur and the investor. The class will entail lectures, case discussions, exercises and potentially a small project. Upon completion of the course, you should be able to:
§ Evaluate the potential of new business ideas and new ventures more accurately
§ Appreciate the critical role financing plays in new venture creation and the successful growth of emerging companies
§ Construct, read and draw practical insights from the financial statements of an entrepreneurial venture
§ Understand how to determine the amount of money an entrepreneur requires to successfully start a new venture
§ Become familiar with the various debt and equity sources of financing available to new and growing businesses
§ Utilize different valuation techniques to estimate the market value of a venture at various stages
§ Formulate a deal structure for a start-up venture and grasp the multiple variables that can be introduced when structuring a deal
§ Understand key tactics and approaches to negotiation when attempting to structure a deal for a new venture
§ Comprehend the different investment harvesting alternatives
Preparation
Students are expected to come prepared to class. This means that they are expected to have read the chapters or the cases that will be discussed in class. I will be constantly testing your class preparation (cases, readings, project progress report, etc.) by surprising individual students with questions before the entire class.
Participation
In addition to reading and homework assignments, you will learn a great deal from videos, discussions, guest lecturers and other activities in class. Your participation will contribute to the success of other students. Valuable contributions through good questions, relevant remarks, and other participative activities that demonstrate your knowledge and encourage creative information and attitudinal exchange, will be highly rewarded. Also, bring your laptop and/or calculators to class if you have one so that we can do in-class exercises.
Tests
You will be given a final exam to test your reading and grasp of the major concepts.
Ways you might flunk the course
This is a course that is designed to prepare you for the real world. Therefore, these are the ways you may flunk the course:
§ Any sign of cheating of any kind. Please review University policy
§ Your performance does not meet a certain minimum criteria as determined by the instructor
§ You show little sense of responsibility or respect for the class (e.g., case discussions). You don’t do your share in the group assignments, resulting in your classmates and teammates doing most of the work (“freeloaders”)
§ You show little courtesy to your classmates by continuing to be late and absent without a great reason
Grading Items / Dates / Allocation, %Participation & Preparation
- Attendance
- Participation
- Case Discussion
- In-Cass Exercises / Various / 30 %
Exam / Final Date of Class / 40 %
Case Assignments & Exercises / Various / 30 %
Total / 100 %
Class Activities: Note this is a course in development. Below is an approximate schedule of activities and materials to be covered. The exact content and order may change and is likely to change during the course of the semester.
Date / Topic / Assignments B4 ClassYou must print out the Blackboard ppt or article and bring to class for note taking
May 14 / Introduction & Overview
- Syllabus
Stages and Types of Financing
Sources and Types of Money / Course Syllabus/Reader
Chapter 2: Beginnings – Establishing a Venture
Blackboard: Chapter01; Sources of Money
May 16 / Entrepreneurship
Source of entrepreneurial opportunities?
Business models and screening businesses
Evaluating business models/Screening of businesses
Evaluating Business Model presentation / “How Venture Capitalists Evaluate Business Opportunities”
Chapter 3: Financial and Business Planning
Blackboard: Identifying Opps
May 21 / Case Discussion: The Knot Case
Measuring & Evaluating Financial Performance / Chapter 6: Milestones and Sources of Financing the Venture
The Knot Case
“Introduction to Financial Ratios and Financial Statement Analysis”
BlackBoard: Reading Financials
May 23 / Case Discussion: Tutor Time A
IRR investment and exercises / Chapter 4: Employee Recruitment and Compensation
The Tutor Time A Case
“The Lifestyle Play” (Instructor Handout)
May 28 / IRR equity investment and exercises / Chapter 9: Valuation of Companies: Pages 157-161; 183-186
IRR Exercises
Exercise: Buying a Business
BlackBoard: Equity Investments
June 1 / Finishing up - IRR exercises & Valuation in entrepreneurial setting
Angel Investing
Venture Capital Investing / IRR Exercises
“Goldilocks Growth” (Instructor Notes)
“Bootstrap Finance”
BlackBoard: Angel; VC
June 4 / Case Discussion: Honest tea
Term Sheet Evaluation and Negotiation / Chapter 7: Practical Aspects of Raising Venture Capital
Chapter 11: Other Venture Capital Investors: Pages 223-225
The Honest Tea Case
BlackBoard: Term Sheet
June 6 / Case Discussion: Trendsetter
Debt Financing / Chapter 10: Venture Capital Funds
Chapter 8: Legal and Contractual Aspects of Raising Venture Capital
The Trendsetter Case
Who adds Value to Ventures(Blackboard)
June 11 / Case Discussion: Butler Lumber Company
Valuation using Discounted Cash Flow / The Butler Lumber Case
“Note on Bank Loan”
June 13 / Case Discussion: Carleton Polish
Harvesting / The Carleton Polish Case
Chapter 9: Valuation of Companies: Pages 162-170
June 18 / Case Discussion: “The Boston Beer Company”
Financial Practices of Socially Responsible Entrepreneurs / Chapter 12: Raising from the Public – Introduction
Chapter 13: The Public Offering Process
“The process of going public”
BlackBoard: The process of going public
June 20 / Final Exam / Review all materials learned