Funding Early Stage Ventures is a course intended for students interested in the area of high-risk finance from the entrepreneurial and venture capital perspectives. It is highly recommended that students have taken Entrepreneurship for High Growth Companies (45-805). Enrollment is limited to 45 students.
The course will be of interest to the student interested in an entrepreneurial career, and who wants to expand his understanding of finance as it relates to a small company in its early stages of growth. The course will also be useful for the student interested in venture capital or other forms of high-risk investing.
The course intends to build on the concepts introduced in the Entrepreneurship courses 45805 and 45806. The course will extend the concepts to emphasize the financial aspects of entrepreneurship, and particularly the strategy for successfully raising money. The course will be a combination of readings, lectures and case analyses that emphasize each area, with appropriate class visitors.
Upon the completion of the course, the student will understand the complexities and nuances involved in creating successful investment transactions for the company, investors and founders. The student will learn to appreciate the “art of the deal” and how deals get done in the real world.
The course will begin with an analysis of risk in the entrepreneurial setting, and then will proceed to look at the structure of the venture capital industry. It is important to understand the process and context in which equity investors make decisions and how an entrepreneur can favorably affect that decision process. Throughout the course there will be exposure to the private investor and how capital from that source compares to institutional venture capital.
The course will then look at the due diligence process that both the investor and entrepreneur go through, with the use of a real life case that allows the students, in teams, to negotiate the terms and structure of a deal, and then compare their results with the actual outcome of the company’s efforts.
The course will conclude with the process by which investors achieve liquidity on their investment through an exit event, while the entrepreneur leads the company into its next phase of growth.
There will be a take home final exam.
The Term Sheet Negotiation assignment will take the place
of a mid-term exam. Throughout the course, students will be required to turn in homework assignments. (10/12 - FD)
Lecture: 100min/wk and Recitation: 50min/wk