沃顿创业学课程：Venture Capital & the Finance of Innovation

This course will focus on the primary activities performed by venture capital professionals, including how they raise capital, how they structure their funds, as well as how they select, fund, and exit high‐ growth privately‐held companies.  We start by outlining how venture capital funds are organized, how and from whom they raise capital, and in what type of firms they typically invest. A good portion of the section will examine the risk return profile of venture capital and whether venture capital “beats the market,” whether it lowers risk of the limited partner’s portfolio, and how the great uncertainty associated with growth firms should be priced.  The second section of the course will examine corporate valuation and value drivers. Given the incredible uncertainty associated with high‐growth companies, alternative methods such as key value driver models and comparable transactions must be employed to triangulate results. Special attention will be given to the valuation process for small, illiquid, high‐growth companies versus mature companies. For instance, how do you bound reasonable estimates of revenue growth, operating margins, and capital productivity when little historical data is available?  The third section of the course will examine valuation techniques necessary to value complex securities associated with venture capital and high growth companies. Preferred stock held by venture capitalist has conversion features that resemble a combination of debt and equity. Therefore, options models must be employed to determine their economic (versus fully‐diluted) value.  During the final section (time permitting), we discuss valuing uncertainty using real options. Real options combine decision trees with options valuation theory from the financial markets (i.e. calls, puts, and forwards). The topic of real options is becoming increasingly popular in both companies and venture capital.2 Complementary Classes: The class will focus on the financial aspects of valuing and funding high growth companies. A critical skill to venture capital that we will cover only briefly is screening and selecting potential investments using business plans. To develop a well rounded skill set, I recommend Entrepreneurship (MGMT 230/801) and Venture Capital and Entrepreneurial Management (MGMT 264/804). Reading Material The course will rely on a textbook and a few supplemental readings (which can be found on webcafe). The textbook can be purchased in the campus bookstore or on Amazon.com: Venture Capital and the Finance of Innovation by Andrew Metrick, 2007, John Wiley & Sons, Inc, NY. The course will also rely on chapters from a secondary text: Valuation: Measuring and Managing the Value of Companies (5 th edition) by Koller, Goedhart, and Wessels, 2010, John Wiley & Sons, Inc, NY. Chapters from Valuation will be provided for you on webcafe. Lecture notes will be distributed in class and will also be available on webcafe. There will be a lot of additional material (mostly lecture notes), so please purchase a binder for course slides and articles