8292 - ENTREPRENEURIAL FINANCE

The course is dedicated to future entrepreneurs who would like to combine the prospect of new ventures with the quest for capital. History abounds with examples of extraordinary entrepreneurs whose new ideas and products changed the market. These new ventures required financing, and the interest in venture creation also requires a broad interest in venture capital markets, investment banking, and other careers related to new venture financing, deal structuring, and harvesting. The motivation of the course is to empower students to be successful in developing and financing the ideas they bring to the market. As a consequence of that purpose, application of financial economic theory to corporate finance is highly developed and analytically sophisticated to fill the gap between economic principles and financial problems associated with incubating and growing new ventures.

• Prelude: why study entrepreneurial finance?
• Finance and the entrepreneur: what makes entrepreneurial finance different from corporate finance?
• The paradigm of maximum value for the entrepreneur
• The process of new venture creation
• New venture financing: stages of new venture development and sources of new venture financing

• The business plan: your calling card through the future
• Why business plans of new venture are different
• Financial aspects of the business plan
• New ventures strategy
• Developing business strategy using simulation
• Methods of financial forecasting
• Assessing financial needs
• Simulation of financing requirements

• The framework of new venture valuation: the state of the art and the difference between seed and start up valuation
• Myths versus practices about new ventures valuation
• Valuation methods comparison: risk-adjusted discount rate method, certainty equivalent method, reconciliation with the pricing of options
• Valuation in practice: the investor's and the entrepreneur's perspectives

• The valuation of financing alternatives: contracts and players to select
• The structure of liabilities to sustain the new venture
• Contracts and agreements with the financers
• Harvesting choices

Attending students
The exam is written. In this case there are two possibilities: two short mid term exams or one end exam. In both cases, 20% of the valuation is based on an individual assignment given during the program.

Not-attending students
The exam is based on a written exam. 

The text book for all the students which join the program is:

• J.K. SMITH, R.L. SMITH, Entrepreneurial Finance, New York, John Wiley & Sons, 2004, 2^nd edition.