20453 - VENTURE CAPITAL AND VALUATION
Department of Finance
Course taught in English
Course Director:
STEFANO CASELLI
STEFANO CASELLI
Mission & Content Summary
MISSION
Innovative technology companies are a driving force behind the growth of advanced economies. They represent the most dynamic part of entrepreneurial firms, and contribute substantively to the creation of jobs, living standards, and wealth. They are important also for the continued growth of large established companies, which often obtain new products and technologies by acquiring innovative start-ups.
A fundamental challenge for all entrepreneurs is the ability to reach out to owners of resources they do not own and convince them to commit them to their venture. Investors are the most important of such owners of resources since money is itself very important for attracting resources like skilled labor or specialized assets. Investors are the key part of the venture capital eco-system, whose size is flying worldwide in the last decade under the pressure of illiquid market success. Without a clear understanding of the venture capital eco-system and of the characteristics of VC investors (i.e., VC funds, VCTs, SBICs, business angels, incubators and, club deals) is not possible to raise money.
The course mission is then: a) to analyze and understand the process through which innovative entrepreneurs may obtain financing, the structure of financial contracts, the valuation of the company and the implications for innovation strategy, b) to explore all the important characteristics of venture investors, from legal issues, to taxation and to the main features of "deal maki
CONTENT SUMMARY
The course analyzes the economics of venture investors and the venture fundraising cycle. The course is structured around the following main themes:
1. An introduction to equity investment eco-system and the specificity of venture capital
2. The clusters of equity investment and the main markets for venture capital at global level
3. The taxonomy of venture capital investors: definitions, key rules, legal issues and taxation.
4. The economics and strategy of venture investors.
5. The investment process within venture capital (fund raising, investing, managing, exiting)
6. Investor assessment of business opportunities.
7. Valuation of entrepreneurial companies.
8. Debt financing and staged financing.
9. Deal structuring, deal contracting, and deal management.
10. Exiting.
Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
- Illustrate and explain the key trends of the venture capital markets
- Distinguish the main characteritics of venture capital investors within the different markets and regulations
- Select the right venture capital investor
- Recognize the goals and constraints of different venture investors, and the implication these have on the management of an entrepreneurial venture.
- Understand the valuation of private knowledge-based ventures.
- Identify the different phases of a financing deal– origination, valuation, structuring, contracting, management, and exit.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
- Face any kind of interview for an internship within the venture capital industry (i.e., funds, advisors and consulting company, start-up)
- Formulate a business plan for eliciting interest from venture investors, and assemble financial projections to illustrate the venture’s business model.
- Elaborate a financial plan and fundraising strategy.
- Pitch a business opportunity to a potential investor.
- Calculate the valuation of an entrepreneurial venture, and assess the value relevance of the covenants in the term sheets.
- Negotiate the right venture capital investment.
Teaching methods
- Lectures
- Guest speaker's talks (in class or in distance)
- Practical Exercises
- Collaborative Works / Assignments
DETAILS
The learning experience of this course is based on in-person lectures. Lectures are the key part of the course experience and consist of both academic materials and of illustrations taken from actual business situations that are commented and discussed. The academic material is complemented by interactive case study discussions and by team execution and discussion of numerical and situational exercises. Exercises are largely done to enter the real feeling of deal making activity within the venture capital eco-system.
Assessment methods
| Continuous assessment | Partial exams | General exam | |
|---|---|---|---|
|
x | x | |
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x |
ATTENDING AND NOT ATTENDING STUDENTS
There is no distinction between attending and non-attending students. The valuation is based on: 70% final (or two partial exams) and 30% on working group assignment.
The exam consists of: (i) multiple choice questions and (ii) numerical exercises.
Teaching materials
ATTENDING AND NOT ATTENDING STUDENTS
1. Slides, excercizes and other materials made available on Blackboard
2. Caselli S., Negri G., "Private Equity and Venture Capital in Europe", Third Edition, Elsevier Academic Press, 2022.
Last change 26/07/2024 13:56