Contents
Section 001: 12:30 pm - 1:45 pm TR, Bidgood Hall 225
Section 003: 2:00 pm - 3:15 pm TR, Bidgood Hall 219
Date range: August 21 - December 6, 2024
New Venture Finance (MGT 481) provides students with working knowledge of financing mechanisms such as friends and family, venture capital, angel investments, and debt instruments for creating and operating a new venture; valuation methods for determining pre- and post-money; creating capitalization tables to track equity ownership assignments and investment rounds.
MGT 300 and MGT 386, MGT 387 may be taken as co-requisite
see this Google doc
Three paperback (or ebooks) available at Amazon.com
Founder’s Pocket Guide: Friends and Family Funding $7.99 ($3.03)
ISBN 978-1-938162-11-4
Founder’s Pocket Guide: Startup valuation $7.99 ($3.99)
ISBN-13: 978-1938162046
ISBN-10: 1938162048
Founder’s Pocket Guide: Term sheets and preferred shares $7.99 ($3.99)
ISBN 978-1-938162-06-0
The lowdown: You can probably get through this course without these books, but I purposely chose these books because of their quality, conciseness, and price.
Professor Craig E. Armstrong, Ph.D. | Alston 155 | MGT481BAMA@gmail.com for "formal" course communications | profcraigarmstrong@gmail.com for after course| Group.me for informal communications - quick answers and sudden announcements - I will invite you to the group by the first day of class or sooner by email. Everyone should be in the groupme for this course.
Add MGT481BAMA@gmail.com to your address books now
I have organized this course into modules that present topics in "bite-sized" portions. A module usually covers a well-defined topic over a short period with defined objectives and graded activities. You should refer to this section of the course web site a few times a week to keep up with updates and to prepare yourself in advance for upcoming activities and assignments.
You will turn in a graded activity nearly every week of the semester beginning the week of Sept 5-8 (the week in which Labor Day occurs). I generally offer practice quizzes, which are not required, for each module. I provide practice quizzes because it's proven to to help reinforce what you've learned. After viewing the assigned readings and videos and attending lectures in class, you'll have a graded assessment activity. This could be in the form of a written analysis, a brief case write-up, or an additional graded quiz. All assignments are due by 11:59 pm, Sunday evenings. The points I've assigned to each module are intentionally set so that messing up on any one particular assessment won't crush your grade (or your soul). Ten assignments each each worth 10 points - usually as quizzes - all add to 100 total points for the course.
(tentative, I'll change dates, but think now in terms of week one, two, three...)
Since we're talking schedules, here's a link to the UA academic calendar page.
This section last updated: July 19, 2024
August 22 - Course opener
August 27: Course opener - Proof Eyewear on Shark Tank - Skills: Simple income statement, backing into numbers, working capital
August 29 - Review syllabus, set up course - Possible ice breaker...Here are the slides I used for the introduction
September 3 - Course opener Financial statements and analysis, here is a link to a write-up overview of financial analysis methods to help you reinforce learnings associated with vertical, horizontal, and ratio analyses (google doc), January 23 Opener slides - Crowdfunding, both equity and rewards-based (<-- links to lecture slides)
September 5 - In-class NON-graded activity for applying financial analysis to business models and companies activities. And here it is: Autoshop financial analysis! Go to the Autoshop page on this website. We will watch the business plan pitch first. Then you will open these documents to work on your assignment: this google form for reading questions and writing answers and this sheet of financial analysis of three toy stores. (We will probably try CROWDFUNDING in Week 4).
The AgeTech Collaborative from AARP |
AND --> Sign up for Winter Interim course (3 credits) MGT 497, "Using Entrepreneurship to Tackle Big Picture Global Challenges" (syllabus) Tell your friends! Be ready to sign up for MGT 497 with me when Spring semester course registration opens! I just confirmed today (9/5) that you can get credit for this class toward your Entrepreneurship minor or concentration. To get it loaded into DegreeWorks, contact Ms. Kim Thrower (kthrower@ua.edu) to let her know you're taking MGT 497 with me and you want the course to count toward ENT minor or conc.
You can use your project from this course to pitch in the AARP's Open Mic Challenge to make your business a reality
September 10 - Ratio analysis for restaurants you (might) love.; Happy Go Fun TIMe: You will work in student teams to create a unique type of shoe to sell in a crowdfuncing campaign. Crowdfunding Activity in class Here is the link to the Netflix design documentary on Nike shoe designer Tinker Hatfield (SUPPLEMENTAL: here is a link to a write-up overview of financial analysis methods (google doc).
September 12 - graded in-class activity using financial analysis for your Kickstarter Shoe Company, 10 points, on Bb as "financial analysis." (If you aren't in class today please complete and submit the assignment by midnight Sunday, September 15.) (Bonus Material: navigate to Ridge and watch the video, read the transcript, live the dream) Optional reading: The college-to-corporate pipeline is facing extinction. Here's why. (Fast Company, 7/10/2024)
September 17, begin Pro Forma Financials topic with Beatbox Beverages example,
September 19 Graded activity (10 points) Pro Forma Financials Assessment with Beatbox Beverages, <-- This link takes you to the assignment, which is at the TOP OF THE PAGE for pro forma financials. For people who like everything on one page, here's the spreadsheet of pro formas for Beatbox Beverages and here's the form with questions for you to answer and submit as your graded assignment. If you were not in class on Sept 19, you have until midnight Sunday, September 22, to submit this assignment for full points consideration.
OPTIONAL READING: Wired.com, Jan 24, 2024: Two Nations, a Horrible Accident, and the Urgent Need to Understand the Laws of Space; WIred.com, Dec 11, 2023: Space junk is a huge problem. It’s also a business opportunity; How celestial ‘gas stations’ could unlock the space economy; Are space-based solar farms the future of clean energy?
September 24; (quick?) Krabby Patties build up method. debrief on pro forma assignment (and relating it to your business model canvas - saved for Thursday); then intro to working capital management
September 26, Working Capital Management in-class assignment (10 points). There is no one correct answer to the decision the owners of Crimson Coffee need to make.
October 1 Overview of Sources of Financing,
October 3: -- No in-class lecture. On 3pm look for Quiz on Sources of Financing, Out of class (10 points), on Bb as Sources of Financing (or close to that). NOTE WELL, STUDENTS! I sent out your quiz by email at 3:05 (or so) to everyone who is in my email list for this course. If you have not received a quiz by email please contact me as soon as possible by GroupMe or the course email.
In the feedback survey for the quiz one of you wrote in the comments, "I actually quite enjoyed the quiz and thought it was fair. It actually tested my understanding and not my ability to read slides to some degree." Thank you! This is exactly what I wanted this quiz experience to be. Something that went beyond measuring your ability to regurgitate slide contents while not being obtuse or unfair to you. That is my goal for every graded activity we conduct.
October 8: Cap Tables: who invested how much at what stage of financing at what share price? Navigate to Cap Tables (short deck of lecture slides), and explore a generic cap table here; Here is a text explanation of how to calculate new number of shares and share price. Other topis for discussion: The importance of "breaking out" so you don't follow value-enhancing investment rounds with dilutive ones.
October 10: Read Understanding Capitalization Tables. Cap Tables In-class team assessment; 10 points, on Bb as "Cap Tables"
October 15: How to talk to investors; Founders; lecture
October 17: Let's use ChatGPT to explore scenario planning for achieving our own goals and objectives under uncertainty (like entrepreneurs). First, open, make a copy, and answer the questions in this google document (the "first doc"). Then Open this google doc (the "second doc"). Then open your favorite AI chat application (e.g., ChatGPT; you will need to be logged into your google account in your browser) and START A NEW SESSION. ATTACH your scenario planning question and answer document (the first doc now in Word format) to the dialog box. Then copy and paste the entire SCRIPT from the second google doc into the dialog box. (Chat will read the entire document you've attached for the content it will analyze and use the script you've pasted in as directions for how it will analyze and report the results). Run the prompt to get feedback from ChatGPT.
ALso this lecture: New skills for new problems. (presentation)
Biggest mistakes first time founders make (7:10). How startup fundraising works (29:00) How to build an MVP (16:52; related Bar Tap MVP) POSSIBLE in-class activity (not graded), Bonus reading: Crunchbase Explainer: How To Sell Your Stock Options On A Secondary Market (Crunchbase, 2/6/23)
October 22: Friends and Family,
October 24: In-class activity in teams (or on your own outside of class), Your assignment: Download this google doc as a Word doc and open this capitalization table, and submit your completed document using this google form.10 points (On Bb as "F&F"). Here is a practice quiz to help you with convertible debt issues and calculations (google doc with questions and annotations)
Optional reading: Silicon Valley's Elite Pour Money into Blotting out the Sun, Bloomberg.com, 10/25/24
October 29: Early Stage Valuation
+ Read all of this article on Objectives and Key Results (OKRs) = Determining what milestones to pursue at which points in your venture's development to optimize use of investor funds and valuation
October 31: FALL BREAK
November 5: No lecture
November 7: Out-of-class quiz, due by midnight, Sunday, November 10, emailed to you around 3:00 pm, November 7. In-class team assessment 10 points (on Bb as "Early Stage Val")
November 12: More methods of early-stage startup valuation; In-class activity: Early stage valuation methods in class
November 14: Angel Investors, Variations in Angel Ownership Percentage (Not today: In-Class NON-Graded Activity in class ) Watch these instructions if you were not able to be in class Out of class quiz, sent out to you around 3:30pm, November 14, and due by midnight, Sunday, November 17: 10 points (on Bb as "Angel")
November 19 Venture Capital (for slides), I am sending the Quiz on Venture Capital at 3:00, Tuesday - due midnight, Sunday, Nov 24. Read also: Series A Term Sheet Template (Y Combinator)
November 21: No lecture in class. Go to Demo Day and look for me to say hi. Read out of class to help you understand the mechanics of Total Wave Fund One. (here is an example of how the mechanics work) (Turn in QUIZ on venture capital by midnight, Nov 24, 10 points (On Bb as "Venture Capital").
November 26-28: Thanksgiving Break
December 3: Last week and last lecture day of the semester; Topic: Search Funds; Quiz on Search Funds is released Tuesday afternoon.
December 5: NO LECTURE - OUT-OF-CLASS QUIZ on search funds is due by midnight, Friday, December 6 (10 points)
We have 100 points on the books by the end of December 6.
September 12 - graded in-class activity using financial analysis for your Kickstarter Shoe Company, (10 points)
September 19 Pro Forma Financials Assessment with Beatbox Beverages --> Browse to this google sheet: (10 points) https://docs.google.com/spreadsheets/d/1SE9h3R6qQOERYCAA9wCrDh99HAIZ90TIRNv-QVEXXHU/edit?usp=sharing
September 26: Working Capital Management in-class assignment (10 points)
October 3: Quiz on Sources of Financing (for lecture materials), here is the link to the quiz, Out-of-class and due by midnight, Sunday, Feb 25, (10 points), on Bb as Sources of Financing
October 10: Cap Tables In-class team assessment; 10 points, on Bb as "Cap Tables"
October 24: In-class activity, Your assignment: Download this google doc as a Word doc, and submit your completed document using this google form.10 points (On Bb as "F&F").
Novermber 7 Early-stage evaluation. Out-of-class quiz, due by midnight, Sunday, November 10, emailed to you around 3:00 pm, November 7. In-class team assessment 10 points (on Bb as "Early Stage Val")
November 14: Angels. Out of class quiz, due by midnight, Sunday, November 17. 10 points (on Bb as "Angel")
November 21: Venture Capital. Out of class quiz, due midnight, Sunday, November 24. 10 points (On Bb as "Venture Capital").
December 6: Out of class QUIZ on search funds due by midnight, Friday, December 6 (10 points)
Mark Suster
Resources you can (should) use in addition to assigned readings and activities, but not required for this course. I want to help you on your entrepreneurial journey in this class, your other classes, and into your future.
Seraf is committed to professionalizing early stage startup investing
Approximations, Assumptions and Aspirations: Methods For Valuing Startups [Part I]. Part of a series on valuation and capitalization. Links to free ebooks on angel investing, portfolio construction, startup economics.
7 Key Risks in Early Stage Investing [Infographic] Technical, Market adoption, Team, Financial, Regulatory, Competition, and Intellectual Property Risk.
Stones Unturned: An investor's guide to due diligence in early stage companies
PaulGraham.com. Mostly longform essays on topics related to startups, the philosophy of startups, phenomena related to the startup context, and being a better prepared founder.
(Some of) My Favorites
How to do great work (for young people, figure out what you're good at. Find your aptitudes. Play to your strengths.)
Startup = Growth. IOW, how do we define a startup? and Why should we care? Everything we assoiate with startups follows growth
Ramen profitable. Ramen profitability buys you time. This essay led me to coin one of my favorite expressions: Live like a student, work like a founder.
Select posts by Marc Andreessen 2007-2009; peer into the thoughts of one of the most influential entrepreneurs over the past three decades on a variety of topics.
A resource for instructional materials and videos of classroom lectures in the STVP program.
Specific resources
Blank, S., Engel, J., & Hornthal, J. 2014. Lean LaunchPad: Evidence-based entrepreneurshipTM educators guide (6th ed.). VentureWell. (full text!)
US Small Business Association (SBA.gov): Financing Options for Small Businesses (45-minute course).
This self-paced training exercise is an introduction to financing options for your business. Topics include; determining your financial needs, loans, grants, venture capital, angel investors, crowd funding and other financial options available to small businesses.
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