Course 2008-2009 a.y.

Course Objectives

Students who attend this course learn which are characteristics and main issues affecting venture and development capital activity. This industry is gaining more and more relevance both in the field of firms financing and as an asset class in the investment portfolios. At the end of 2006 in Europe venture capital firms invested 71 bn. in more than 7.500 companies and they had 112 bn. of free capital to invest. The learning goals are as follow:

• how the fundamental financial theories work in the venture capital industry
• venture capital as an asset class and its investor categories
• which are the target companies venture capitalists wish to invest
• management of the investment process and way out
• venture capital as a boost to the growth and restructuring of economies

Course Content Summary

• Venture and development capital: an industry overview
• Investor categories who place funds in venture capital industry (financial investor, corporate venture capital, government and local authorities, informal investors)
• How to rule relationships between general and limited partners (incentives schemes, disclosure and accountability, how to share profits between parties)
• How to invest: strategies and vehicles
• What makes venture capital target firms special and why they are not able to raise capital in the debt market
• Solutions from venture capitalists to firm needs. Relationships between entrepreneur and investor
• Investment criteria and investment styles
• Investment valuation: the business plan, deal structuring, valuation criteria and expected IRRs
• Management of the way out: how and when exit from the investment
• Venture and development capital industry in fast growing economies (i.e. India and China): why investing in developing countries and their investment cycle

Detailed Description of Assessment Methods

The assessment process is shared in two parts: a) a written exam; and, b) a group assignment. The grade related to the assignment expires at the end of the academic year. There are not differences in the assessment process for attending and not attending students.

Textbooks

Decisions about textbooks will be taken by the end of July.

Two possibilities are under evaluation: a) an international manual, such as Gompers, Lerner, The venture capital cycle, MIT Press, 2004; or, b) a collection of articles and working papers covering each topic of the course programme.

Prerequisites

Students are suggested to gain the basic course of  Financial System in order to be in a position to fully exploited this course attendance. Frequency of Corporate Finance could be also usefull.