New Venture Finance Fall 2020

WHAT

New Venture Finance (MGT 481) provide 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.

Pre-requisites

MGT 300 and MGT 386

Syllabus

see this Google doc

Strongly Suggested Texts

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.

Course objectives

This course is for aspiring or active entrepreneurs who want to understand how to secure funding for their company. This course will demystify key financing concepts to give entrepreneurs and aspiring entrepreneurs a guide to secure funding. Examine the many financing options available to get your new venture funded. Learn the basics of finance, valuations, dilution and non-dilutive funding sources. Understand capital structure for new ventures, term sheets and how to negotiate them, and the differences between early-stage versus later-stage financing. Develop an understanding of how to develop winning investor pitches, who and when to pitch, how to avoid common mistakes that limit the effectiveness of the pitch, and how to ‘get to the close’.

Key questions answered within the course include:

• When to raise outside capital?

• What kind of investors invest by stage and where to find them?

• What are your fundraising options?

• What are the key components of the term sheet?

• How to perform company valuations?

• How to create milestones to delineate the progress of the new venture?

• How to pitch to investors?

• What techniques help the entrepreneur ‘get to the close’?

(Adapted from https://www.coursera.org/learn/startup-funding)

Learning outcomes

Student learning objectives include at a minimum the following:

• Recognize and anticipate situations where entrepreneurs should raise outside capital

• Identify appropriate types of investors by stage and recognize where to find them

• Identify and evaluate fundraising options that are appropriate the to type and stage of development of the venture

• Understand and differentiate the key components of the term sheet

• Perform several different approaches to company valuations

• Understand the components of an effective pitch to prospective investors

• Recognize, evaluate, and select situation-appropriate techniques that help the entrepreneur ‘get to the close’

Instructor

Professor Craig E. Armstrong, Ph.D. | Alston 155 | MGT481BAMA@gmail.com for all course communications.

MODULES

You will turn in a graded activity every week of the semester beginning the week of August 24. In addition to the practice quiz, which is provided to help reinforce what you've learned after viewing the assigned readings and video, 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 quiz. All assignments are due by 11:59 pm, Friday, of that week, Sunday evening at the end of the week. 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). Four assignments each worth 7 points and nine assignments each worth 8 points add to 100 total points for the course.

1. Financial Analysis Assessment due August 30, 7 points

2. Pro Forma Financials Assessment due September 6, 7 points

3. Working Capital Management Assessment due September 13, 7 points

4. Overview of Sources of Financing Assessment due September 20, 7 points

5. Founders Assessment due September 27, 8 points

6. Friends and Family Assessment due October 4, 8 points

7. Early Stage Valuation Assessment due October 11, 8 points

8. Angel Investors Assessment due October 18, 8 points

9. Venture Capital Assessment due October 25, 8 points

10. Cap Tables Assessment due November 1, 8 10 points

11. Term Sheets Assessment due November 8, 8 10 points

12. Harvest Assessment due November 15, 8 10 points

13. Search Funds Assessment due November 22, 8 10 points

Resources

Resources you can (should) use, but not *required* for this course. We professors do a lot of curating!

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.

Content

• Course

• Course Transcript

• Worksheets