Course 2012-2013 a.y.

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) - BIEMF (6 credits - I sem. - OP  |  3 credits SECS-P/09  |  3 credits SECS-P/11)

Course Director:
CLAUDIO ZARA

Course Objectives

Students who attend this course learn what the characteristics and main issues affecting venture and development capital activity are. This industry is increasingly gaining relevance both in the field of firm financing and as an asset class in investment portfolios. In 2010 in Europe venture capital firms invested € 43 billion in 5.033 companies and they raised € 20 billion of new funds for investment purposes. The learning goals are as follows:

• 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 in;
• management of the investment process and way out.

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 regulate relationships between general and limited partners within investors organisation (incentives schemes, disclosure and accountability, how to share profits between parties).
• How to invest: legal framework, strategies and vehicles.
• What makes venture capital target firms special and when 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 (round financing, milestones, venture debt).
• Investment valuation: business plan, deal structuring, valuation criteria and expected IRRs.
• Management of the way out: how and when to exit from the investment.

Detailed Description of Assessment Methods

Two different methods: written exam and group assignment (optional).

For attending students the assessment process is divided in three parts: a) check tests hand out during the course on a regular base (multiple choice questions, weight 40%); b) a final exam (a set of open questions, weight 60%); c) a group assignment (an option to obtain extra points a maximum of 4).

The grade from the check tests can be used only once within the February exam date. The grade from the assignment will expire at the end of the current academic year.

For non-attending students or attending students who did not take, or pass, the check tests there is one final exam (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 sections)
• Some working papers/case histories distributed on the course e-learning web site.

Exam textbooks & Online Articles (check availability at the Library)

Prerequisites

It is suggested that students, although this is not compulsory, either have attended or are attending the basic courses in Financial System and Corporate Finance in order to fully exploit the value of the course.

Last change 05/06/2012 09:43