Contents
Section 001: 11:00 am - 12:15 pm TR, Bidgood Hall 225
Section 002: 12:30 pm - 1:45 pm TR, Bidgood Hall 125
Date range: January 9 - April 25, 2025
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 later in January. 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, unless I specify a different day (rarely). 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: Janueary 4, 2025
Jan 9 - Course opener; Review syllabus, set up course - Possible ice breaker...Here are the slides I used for the introduction
Jan 14: Course opener - Proof Eyewear on Shark Tank - Skills: Simple income statement, backing into numbers, working capital. The first in a series of Shark Tank cases.
Jan 16: Follow-up skills on thinking like a Shark Tank Shark - First, a review of last lecture's lessons - Then See "Shark Tank II" for group activity. Speaking of trade shows, what can we learn about the "trade show industry" that informs our assessment of selling at trade shows? See this google doc for some answers.
Jan 21 - 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),
Jan 23 - In-class non-graded activity for applying financial analysis to business models and companies activities. Use this google doc to answer questions about Proof Eyewear's pro forma financials. When you are done, please turn in your docs to profcraigarmstrong@gmail.com. I will send out a GRADED QUIZ to you later on Jan 23. (10 points)
NOTE: Please do not use my @ua.edu email address for class communications! See above.
Jan 28 - 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).
Jan 30 - Crowdfunding Activity in class (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)
Feb 4, begin Pro Forma Financials topic with Krabby Patties build up method and Beatbox Beverages example,
Feb 6 Non-Graded activity (followed by weekend quiz, 10 points) 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 non-graded assignment.
Did you miss last week's quiz on pro forma financials? You can still complete it for partial credit here.
Feb 11; Intro to working capital management
Feb 13, No lecture; Working Capital Management Quiz, sent out Thursday, Feb 13 (or sooner), due midnight, Feb 16, (10 points).
Feb 18 Overview of Sources of Financing,
One of you asked in class yesterday about the tax structure of LLCs, which are a flexible, less costly way to create a legal entity than C Corporations. The net incomes of LLCs 'pass through' to the 'members' of the LLC. If you have multiple members then there are special IRS forms you can use to report income from your LLC in your own personal taxes. I queried ChatGPT with a lot of questions and now have this document to share for those who are interested.
And, one of you asked what keeps VC firms from using their serial fund structure from engaging in pyramid schemes (an intriguing question!). Venture capital (VC) firms raise multiple funds over time, often referred to as "serial funds" or "vintage funds." While, in theory, this structure might resemble aspects of a pyramid scheme—raising new funds while older ones are still active—several structural, legal, and market-based factors prevent VC firms from operating as pyramid schemes. A rather detailed examination of this question and the multiple safeguards that prevent this behavior is provided in this doc. Thank you both for your questions!
Feb 20: More Sources of Financing. Here is our in-class activity on Sources of Financing for Autoshop. On 3pm-ish look for Quiz in your email on Sources of Financing, Out of class (10 points), due midnight Sunday, Feb 23. Listed on Bb as Sources of Financing (or close to that).
Feb 25: 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.
Feb 27: Read Understanding Capitalization Tables. Cap Tables In-class non-graded activity to immerse you in cap table logic (team activity); On Thursday afternoon I'll send out an Out-of-class quiz, 10 points, listed on Bb as "Cap Tables," complete by Sunday, midnight.
Mar 4 How to talk to investors; Founders
Mar 6: How entrepreneurs finance their ventures in earliest stages (google slides)
Resourceful entrepreneur: Just launched Jamie Siminoff (2:27); Shark Tank appearance in 2013 (9:42)(Read comments below YouTube video); 3 years later From Garage to 150+ employees "Look at that...now there is a like whole f***ing building..." (5:42). Amazon purchased Ring on April 12, 2018 for approximately $839 million. Armstrong estimated Cap Table
Read: Jamie Siminoff '99 and the Power of Entrepreneurial Thinking (Babson.edu, 4/19/21); Working on Cap Tables with ChatGPT (Armstrong, 3/6/2025)
END of WEEK 9 - there is no graded activity this week
I'm saving this activity for AFTER SPRING BREAK. 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.
No graded assignment this week
Also this lecture: New skills for new problems. (presentation)
BONUS: Biggest mistakes first time founders make (7:10). Tentative: 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)
Spring Break
Suggested Readings: 16 Startup Metrics from A16Z.com;
Mar 18: Friends and Family,
Mar 20: Early stage valuation: Early Stage Valuation
You'll take a quiz on Friends and Family that I send out on Thursday, Mar 20 (due March 23)
Optional reading: Silicon Valley's Elite Pour Money into Blotting out the Sun, Get ready for solar radiation management (SRM) Bloomberg.com or here, 10/25/24. Topics: Permissions, SRM credits sales, climate change, monetization - a unique business model
Mar 25: No lecture, no graded activities
Mar 27: No lecture, no graded activities
Apr 1:Early Stage Valuation - To be honest, I don't know if I'll be allowed to return to lecture; if I can't return by this date I'll have some brief videos and applications of valuation techniqes.
Viewing in class ; + 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
Apr 3: Out-of-class quiz on early-stage valuations, due by midnight, Sunday, Apr 6, emailed to you around 3:00 pm, Apr 3.10 points (on Bb as "Early Stage Val")
Apr 8 More methods of early-stage startup valuation; In-class activity: Early stage valuation methods in class
Apr 10: Angel Investors, Variations in Angel Ownership Percentage Out of class quiz, sent out to you around 3:30pm, Apr 10, and due by midnight, Sunday, Apr 13: 10 points (on Bb as "Angel")
Apr 15 Venture Capital (for slides), I am sending the Quiz on Venture Capital at 3:00, Thursday - due midnight, Sunday, April 20. If you plan on spending Sunday celebrating Easter, as I am sure many of you are, then consider completing the quiz on Thursday, Friday, or Saturday. Read also: Series A Term Sheet Template (Y Combinator)
Apr 17:More venture capital Read before 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, Apr 20, 10 points (On Bb as "Venture Capital").
April 22 and 24, Entrepreneurship through acquisition, aka "Search Funds," 4/22; No lecture on 4/24; out-of-class quiz due Sunday midnight, April 27.
For now (1/9), view dates above.
1/23 - graded out-of-class quiz, (10 points)
1/30 Build a product with AI AND create an initial pro forma income statement
2/6: Quiz on Pro Forma Financials Assessment with with some info from Beatbox Beverages pro formas (10 points), your grade appears as "pro forma" on Bb Related:https://docs.google.com/spreadsheets/d/1SE9h3R6qQOERYCAA9wCrDh99HAIZ90TIRNv-QVEXXHU/edit?usp=sharing
2/13: Quiz on Working Capital Management in-class assignment (10 points) , your grade appears as working capital on Blackboard
2/20 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), your grade appears on Bb as Sources of Financing
2/27: Cap Tables Quiz; 10 points, your grade appears on Bb as "Cap Tables"
3/20: Friends and Family Out of class quiz,10 points, due midnight 3/23 (your grade appears on Bb as "F&F").
4/3 Early-stage evaluation. Out-of-class quiz, due by midnight, Sunday, April 6, 10 points (your grade appears on Bb as "Early Stage Val")
4/10: Angels. Out of class quiz, due by midnight, Sunday, April 13. 10 points (your grade appears on Bb as "Angel")
4/17: Venture Capital. Out of class quiz, due midnight, Sunday, April 13. 10 points (your grade appears on Bb as "Venture Capital").
4/22 or 4/24: End-of-semester topic on Entrepreneurship through Acquisition (Out-of-class quiz, 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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