040909 VK KFK PÖ: High-Profile Employees, Spin-Offs and Entrepreneurship (2009S)

Course Description:
The primary objective of this course is to provide students with a general understanding of the concepts and institutions involved in Venture Capital (VC) investing. This course combines the perspective of the VC firm with the funded entrepreneurs. As we explore the venture capitalists perspective, we will address several aspects of the investment process. We address the challenges of fundraising, due diligence, financing strategies and the importance of the analyzing business plans for deal selection. Concerning the entrepreneur perspective, the course will deal with common organizational issues encountered in the formation of a venture-backed start-up, including matters relating to initial capitalization, intellectual property, and early stage equity incentives. Moreover, we will elaborate on elements of compensation (including both: cash and equity) and hiring that are common to venture-backed companies in high-tech sectors. Combining the two perspectives, the course will address the financing arrangements, i.e. typical investment terms found in the term sheet and the dynamics of negotiation between the entrepreneur and the venture capitalist as well as corporate governance in the context of a venture-backed start-up company and the typical dynamics that play out between VC and the entrepreneur in the post-financing phase.

While it might facilitate the understanding of some issues at hand, a background in finance is not mandatory for participating in this course (nor is the successful completion of the corresponding EK). All concepts will be explained thoroughly in class, to allow students with all sorts of backgrounds to acquire the skills and knowledge to evaluate business ideas, value proposed transactions and deal with the organizational issues of VC financing and respective involvement in the VC-entrepreneur relationship.

The course will be case intensive. Venture financing is a topic that can best be understood when looking at real world examples rather than looking at things ¿from the ivory tower¿. Preparation of cases and class interaction is therefore the building block of this course to bring the various topics across. As a matter of fact, the course will focus on real-world examples of VC financing by analyzing case studies. Students are expected to prepare handed out questions on the corresponding cases to better understand the problems and issues at hand and to facilitate the discussion in class. In order to make the class as practice oriented as possible and to achieve the aspired learning outcome, class participation of students and preparation of cases is therefore absolutely essential.

This course is designed to help you learn to distinguish between various topics and arguments, phrase your own arguments verbally and in written form and interact with your fellow classmates. The best cases are deliberately written to be ambiguous. While there are no right answers, there are good arguments and bad arguments. So you are expected to feel comfortable with ambiguity. In the real world, your appraisals (your ¿grade¿, if you will) are based on how you work and communicate with your colleagues. This course may be one of the last low-risk environments for you to work on your communication skills.