Course 2010-2011 a.y.

Course Objectives

The aim of the course is to provide students with a deep understanding of the role played by the financial market, and in particular by financial intermediaries, in the creation of new firms, in fostering the development of innovation as well as the commercialization of new business ideas. Particular attention is dedicated to the role played by venture capital.

The second part of the course examines business plans, financial planning and the valuation of entrepreneurial firms. The importance of strategy in new venture planning is stressed to help develop a successful business plan for a new venture. You'll learn how to forecast business economics in order to assess both capital requirements and appropriate financial sources. Furthermore, you’ll understand how to evaluate a new business, considering both the entrepreneur’s and outside investor’s points of view, and what is important for venture capitalists in order to decide to enter the investment.

Course Content Summary

• The sources of entrepreneurship
• The life cycle of the firms and their different financial needs:
• Entrepreneurial Finance
• Venture Capital
• The Interaction between Product Market and Financing Strategy
• IPO and the effect of going public
• Financial contracting theory and applications
• Financial Investors for New Technology based Firms: an Overview
• Methods of Financial Forecasting
• Assessing Financial Needs and Capital Raising
• Cash Flow Valuation
• Valuation for Fully Diversified Investors and Investment Decisions
• Valuation for Not/Partially Diversified Investors and Investment Decisions

Detailed Description of Assessment Methods

There will be a written exam at the end of the course.

Textbooks

• Venture Capital and the Finance of Innovation, by A. Metrick John Wiley and Sons Inc.
• Entrepreneurial Finance, by J. K. Smith and R. L. Smith, John Wiley & Sons Inc, 2^nd Edition (2004)
• Some topics will be covered by case histories/working papers that will be distributed through the Personal Agenda.

Prerequisites

In order to successfully attend and complete this course, students are expected to know the basics of:

• descriptive and inferential statistics (mean, standard deviation, correlation, variance-covariance matrices, main statistical distributions, linear multivariate regressions, etc.);
• investments (i.e. capital asset pricing model);
• derivatives (i.e. basic concepts related to forward transactions, options, futures).