syllabus

available as a google doc

September 10, 12 - No quiz this week

Read: Here's who has gone public in 2019 (so far) (Crunchbase.com, 8/22/19). Or really, "scan" this article to see (1) what industries these companies tend to be in, (2) what has happened to the companies' valuations since they went public, (3) if there are any really big losers this year (pssstt... their names rhyme with doober and grift), and (4) any other patterns you can discern from the IPOs.

Meanwhile, what's up with WeWork's IPO? Here's their S-1 filing. Check out these vertical analyses of their income statement and balance sheets and see graphic below.

We may also discuss the S-1 filing of Super League Gaming, which went public February 26. You should read the prospectus summary for a well-done overview of the esports industry. (SLGG on the NASDAQ market; CA show them financials)

September 10: We'll discuss Autoshop and begin this graded activity. See these notes on validation.

By the numbers:

1. Hand-outs for Autoshop hypothesis testing
2. Show Autoshop video
3. Explain Thursday assignment

September 12 in class: (done in class, 5 points of final grade - in teams, of course). If you cannot be in class on Thursday you will need to complete the Autoshop Build-Up for F&F Needs form below on your own and submit it to 481finance@gmail.com by the end of Friday this week. Alternatively, you could Face Time or Skype in with your group; I expect people who do this to be fully engaged with their group for the entirety of the activity...make sure your group members add your name to the document.

• View: Autoshop Business Plan Presentation
• Complete: Autoshop Build-Up for F&F Needs

Bonus Reading

VC, angel, and crowdfunding of entrepreneurial ventures: a literature review

October 15, 17

Oct 15 Topic: Cap Tables

Example from Stitch Fix IPO! and Ring Valuations

Here is a reverse-engineered cap table for Stitch Fix; I had to make assumptions about the pre- and post-money values; the IPO values should match up with the aggregated cap table in Stitch's S-1 document. ...and here is the promised "constructed" cap table for Stitch Fix; I had to make assumptions about the pre- and post-money values; the IPO values should match up with the aggregated cap table in Stitch's S-1 document.

October 17: Video lecture (below) Beatbox Cap Table 2019

Complete Quiz 6 by 11:59 pm, Friday, October 18. [I sent it to you around 3:45 Thursday)

October 22, 24

Oct 22: Discuss Final Team Project - see below...

I have been advised that I may need four weeks to complete the first stage of my recovery from surgery. So I'm going to need to spend some time on setting up a culminating project for all of you to work on in teams today.

Final team project - Templates and Instructions

Note: These are your final team project templates and instructions.

Discuss final team project: Spatial Systems. This is the first part of our final team project. We'll watch a demo of the technology and discuss the four-page information you have. Then you'll form into teams. Teams should be at least two in size and not any larger than four... Send me ONE email from each team listing members to 481finance@gmail.com (AND CC YOUR TEAM MEMBERS). You will continue to work as teams from now until the third week of November .

• HERE IS THE SPREADSHEET FOR THE PRO FORMAS.
• AND here is the spreadsheet template you can use as a starting point for the risk reduction pre-money valuation methodology.
• HERE is a Q&A document addressing your specific questions about the assignment (I'll continue to add to this document as long as you send me questions by email).

Check out Blue Vision Labs' Crunchbase entry for its Seed Round investment of $14.5M and this article in Venturebeat.com discussing the company and investment.

Oh yes, and here is the cap table template you've used before.

And here is the Armstrong Spatial Cap Table with Seed and Series A investments

October 29 - November 14

Work on Team Projects

READ: Some comments and observations from today's in-class teamwork:

• as you work through comparables, step-up method, and risk mitigation pre-money valuation methods, one or two of them might not seem relevant. Remember that at least one of these is really relevant mostly to very early-stage startups. Know which.
• I expect you to identify on Crunchbase at least one comparable company by name and to justify your approach to comparables using that particular firm(s). Here's an example: if a "comparable" company has, say, achieved Series D financing, you can ballpark an estimate of its pre- and post-money valuations and use google to see what kinds of milestones they've achieved. Decide for yourself if your focal company should be worth less, about the same as, or more than the value of the comparable based on progress.
• I expect a certain sense of intellectual curiosity out of you. Another way to close out the semester would be to have a closed-book final exam in which you would be expected to know different valuation methods, cap table entries, and pro forma financials. You have everything you need, plus all of your notes, several class-time hours to work together, and the internet to fully explore this project. Please perform accordingly.

Questions for you to consider as you work through the points:

• at each point where you need to determine a valuation and/or a percentage of ownership ask yourself (a) what is the question being asked that I need to answer? (b) what rules of thumb, if any, apply to this situation and how should I use them? (c) do my numbers seem reasonable based on what I've done in previous valuation and cap table activities in class? (d) finally, do the percentages of ownership at the end of each investment round make sense? Have I satisfied the equity ownership needs for each group on the cap table?
• Here are the grading criteria for the final team project

OPTIONAL READ AND LEARN:

Due Diligence from Microventure's Venture Capital Education Center

For Recent IPOs, Valuation-Per-Employee Ranges From $80K To $50M, Crunchbase.com, 11/9/18. A company’s valuation commonly has little relation to how many people actually work there.

"Conventional wisdom is to raise about every 18 months, which implies that most startups never have more than two years of cash in the bank." - Source: Crunchbase.com (hence the VC Quick Valuation Method, aka the VC Lazy Valuation Method...)

and also: How much runway should you target between financing rounds? Medium.com, 10/26/17 "

According to CBInsights, running out of cash is the second leading cause of startup failure. Needless to say—it’s an important question to get right. If an entrepreneur tries to answer this question by triangulating from Google results, they’ll find a few sources that tell them the conventional wisdom is anywhere between 12-to-18 months."

October 29, 31

October 29: No lecture (work in classroom or out of class)

No Quiz either. Just... (and keep scrolling down for specific instructions for weeks in November)