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Course 2016-2017 a.y.

30186 - VENTURE AND DEVELOPMENT CAPITAL


CLEAM - CLEF - CLEACC - BESS-CLES - WBB - BIEF - BIEM
Department of Finance

Course taught in English


Go to class group/s: 31

CLEAM (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11) - CLEF (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11) - CLEACC (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11) - BESS-CLES (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11) - WBB (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11) - BIEF (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11) - BIEM (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11)
Course Director:
CLAUDIO ZARA

Classes: 31 (I sem.)
Instructors:
Class 31: CLAUDIO ZARA


Course Objectives
Students who attend this course learn what the features and the issues affecting venture and growth capital activity are. This industry is increasingly gaining relevance both in the field of venture financing and as an asset class inside investors portfolios. In the US venture capital (VC) firms invested US$ 59.1 billion in 3,709 companies in 2015.
  • How does a new venture raise its financial capital and which kind of capital does it need?
  • How do VC firms work and how are they managed?
  • How do outside investors select and screen investment opportunities in the VC field?
  • What is a financial plan inside a business plan and how do venture capitalists read it?
  • Which are the investment policies, the valuation criteria and the target IRRs for the VC industry?

Course Content Summary
The course is split in two parts. The first part is focused on the financial features of VC target companies, the VC industry characteristics and the management of a VC investor. The second part devotes attention to carrying out a comprehensive analysis of an investment opportunity from the VC firm’s point of view. The whole course is supported by examples and case studies from real experience and real VC investments.
  • What is VC and why it exists.
  • Why VC target firms are special and when and why they are not able to raise capital in the debt market.
  • Solutions offered by venture capitalists to the firm’s financial needs. Relationships between the entrepreneur and the outside investor.
  • Venture and development capital: the industry overview.
  • How to invest: legal framework, strategies and investment vehicles.
  • Investor categories who place funds in the VC industry (financial institutions and pension funds, family offices, corporations, government and local authorities, informal investors).
  • How to regulate relationships between general and limited partners within investment schemes (disclosure and accountability, incentives schemes, how to share profits between parties).
  • Investment criteria and investment styles (round financing, milestones, venture debt, portfolio leverage and exit way).
  • Investment valuation: business plan and business forecast.
  • Investment valuation: valuation criteria, expected IRRs and investment decisions.

Detailed Description of Assessment Methods
For attending students
For attending students the assessment process is divided in three parts:
a) partial and final-term tests (multiple choice questions, weight 50%);
b) a group assignment (weight 40%);
c) class participation and attendance (weight 10%).

For non-attending students
For non-attending students or attending students who do not take, or pass, the partial test there is a written exam at the end of the course (a mix between multiple choice and open questions).

Textbooks
  • J.K. SMITH, R.L. SMITH, R.T. BLISS, Entrepreneurial Finance. Strategy, Valuation and Deal Structure, Stanford University Press, 2011 (only some chapters);
  • Lesson slides and other materials shared on the course e-learning web site.

Prerequisites

This course is also a quantitative course but it does not focus on either mathematical derivations or complicated statistical analysis. It does require some basics in mathematics and statistics for finance. Financial Mathematics, Accounting, and Corporate Finance are advisable prerequisites for Bocconi students. For Exchange students, having attended similar courses is suggested. You should have reasonable knowledge of the basics in financial mathematics such as the time value of money, annuities and perpetuities; the basics in statistics such as mean/standard deviation, variance/covariance and probabilities; the basics in accounting such as being able to read information contained in balance sheets, income statements and cash flow statements.

Last change 24/05/2016 15:38