Course:
Management 698
Title:
Entrepreneurial Finance
Instructor:
Dr. David Y Choi
dchoi@lmu.edu x: 8-2344
Course Schedule:
Mon & Wed 7:10 – 10:10 pm
Prerequisite:
Finance 608 & Accounting 602
Textbook:
Required: Case Book assembled by instructor (Get it at
http://www.xanedu.com/login?PackId=266222). Course Pack Title:
Entrepreneurial Finance, Summer 2007.
Office: Hilton 200B
Required: Download all powerpoint presentations and papers from
Blackboard and have them with you so you can take notes on them.
Required: Book: From Concept to Wall Street: A Complete Guide to
Entrepreneurship and Venture Capital by Oren Fuerst & Uri Geiger
Office hours:
TBD
Course Overview
Entrepreneurs often point to finance being the most important skill they lack. What complicates the
matter further is that financial decision making in the context of new venture is different from
materials taught in most finance courses. This course is aimed primarily at people who may be
involved in an entrepreneurial venture at some point in their careers whether in a large organization,
a turnaround situation, a management buyout, or a startup. This topic is also important to many of
our students who will be involved in small business investments or venture financing, either as an
entrepreneur or an investor. Needless to say, students interested in careers in venture capital, private
equity, investment banking or banking would find this course very relevant.
In this newly-developed course, students will be introduced to financing issues and options from the
vantage points both of the entrepreneur and the investor. The class will entail lectures, case
discussions, exercises and potentially a small project. Upon completion of the course, you should be
able to:
 Evaluate the potential of new business ideas and new ventures more accurately
 Appreciate the critical role financing plays in new venture creation and the successful growth of
emerging companies
 Construct, read and draw practical insights from the financial statements of an entrepreneurial
venture
 Understand how to determine the amount of money an entrepreneur requires to successfully start a
new venture
 Become familiar with the various debt and equity sources of financing available to new and
growing businesses
 Utilize different valuation techniques to estimate the market value of a venture at various stages
 Formulate a deal structure for a start-up venture and grasp the multiple variables that can be
introduced when structuring a deal
 Understand key tactics and approaches to negotiation when attempting to structure a deal for a
new venture
 Comprehend the different investment harvesting alternatives
Preparation
Students are expected to come prepared to class. This means that they are expected to have read the
chapters or the cases that will be discussed in class. I will be constantly testing your class preparation
(cases, readings, project progress report, etc.) by surprising individual students with questions before
the entire class.
Participation
In addition to reading and homework assignments, you will learn a great deal from videos,
discussions, guest lecturers and other activities in class. Your participation will contribute to the
success of other students. Valuable contributions through good questions, relevant remarks, and
other participative activities that demonstrate your knowledge and encourage creative information
and attitudinal exchange, will be highly rewarded. Also, bring your laptop and/or calculators to
class if you have one so that we can do in-class exercises.
Tests
You will be given a final exam to test your reading and grasp of the major concepts.
Ways you might flunk the course
This is a course that is designed to prepare you for the real world. Therefore, these are the ways you
may flunk the course:
 Any sign of cheating of any kind. Please review University policy
 Your performance does not meet a certain minimum criteria as determined by the instructor
 You show little sense of responsibility or respect for the class (e.g., case discussions). You don’t do
your share in the group assignments, resulting in your classmates and teammates doing most of the
work (“freeloaders”)
 You show little courtesy to your classmates by continuing to be late and absent without a great
reason
Grading Items
Participation & Preparation
- Attendance
- Participation
- Case Discussion
- In-Cass Exercises
Exam
Dates
Various
Allocation, %
30 %
Final Date of Class
40 %
Case Assignments & Exercises
Total
Various
30 %
100 %
Class Activities: Note this is a course in development. Below is an approximate schedule of
activities and materials to be covered. The exact content and order may change and is likely to
change during the course of the semester.
Date
Topic
Assignments B4 Class
You must print out the Blackboard ppt or
article and bring to class for note taking
May 14
Introduction & Overview
Course Syllabus/Reader
- Syllabus
Chapter 2: Beginnings – Establishing a
Stages and Types of Financing
Venture
Sources and Types of Money
Blackboard: Chapter01; Sources of Money
May 16
May 21
Entrepreneurship
Source of entrepreneurial opportunities?
Business models and screening
businesses
Evaluating business models/Screening of
businesses
Evaluating Business Model presentation
Case Discussion: The Knot Case
Measuring & Evaluating Financial
Performance
May 23
Case Discussion: Tutor Time A
IRR investment and exercises
May 28
IRR equity investment and exercises
June 1
Finishing up - IRR exercises & Valuation
in entrepreneurial setting
Angel Investing
Venture Capital Investing
Case Discussion: Honest tea
June 4
Term Sheet Evaluation and Negotiation
June 6
Case Discussion: Trendsetter
Debt Financing
June 11
June 13
June 18
June 20
Case Discussion: Butler Lumber
Company
Valuation using Discounted Cash Flow
Case Discussion: Carleton Polish
Harvesting
Case Discussion: “The Boston Beer
Company”
Financial Practices of Socially
Responsible Entrepreneurs
Final Exam
“How Venture Capitalists Evaluate
Business Opportunities”
Chapter 3: Financial and Business Planning
Blackboard: Identifying Opps
Chapter 6: Milestones and Sources of
Financing the Venture
The Knot Case
“Introduction to Financial Ratios and
Financial Statement Analysis”
BlackBoard: Reading Financials
Chapter 4: Employee Recruitment and
Compensation
The Tutor Time A Case
“The Lifestyle Play” (Instructor Handout)
Chapter 9: Valuation of Companies: Pages
157-161; 183-186
IRR Exercises
Exercise: Buying a Business
BlackBoard: Equity Investments
IRR Exercises
“Goldilocks Growth” (Instructor Notes)
“Bootstrap Finance”
BlackBoard: Angel; VC
Chapter 7: Practical Aspects of Raising
Venture Capital
Chapter 11: Other Venture Capital
Investors: Pages 223-225
The Honest Tea Case
BlackBoard: Term Sheet
Chapter 10: Venture Capital Funds
Chapter 8: Legal and Contractual Aspects
of Raising Venture Capital
The Trendsetter Case
Who adds Value to Ventures(Blackboard)
The Butler Lumber Case
“Note on Bank Loan”
The Carleton Polish Case
Chapter 9: Valuation of Companies: Pages
162-170
Chapter 12: Raising from the Public –
Introduction
Chapter 13: The Public Offering Process
“The process of going public”
BlackBoard: The process of going public
Review all materials learned