Session 9: Venture Finance I: Sources of Capital
Date: Tuesday, February 4, 2020
Summary
How do entrepreneurs set priorities when gathering financial resources? Today’s session introduces the topic of venture finance.
Quote of the Day: “Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed.”
Booker T. Washington
Study Questions
(Policy on Study Questions)
- What are the primary reasons for creating a business plan (or pitch)? What are the benefits from creating one? What are the most important sections of a business plan and why?
- In your personal opinion, what is the most important risk to reduce in a startup? Is it technology, product, market, team, or financial? Why?
- How do technology-intensive entrepreneurs finance their ventures? What do venture capitalists actually do? What is the structure of a typical venture capital firm? How does a typical firm operate?
Required Readings
(Policy on Required Readings)
- Technology Ventures (Byers, Dorf, and Nelson): Chapters 15 through 20 (Textbook’s Section Highlights only); focus on Sections 18.1, 18.3 and 18.9 this week; the rest are less important this week.
- Teaching Note: Valuation of High-Technology Ventures by STVP.
- Skim Price-Earnings Ratio (P/E) Definition.
- Skim Welcome to the Unicorn Club: Learning from Billion Dollar Startups by Aileen Lee of Cowboy Ventures (who funded Rent the Runway while at KP).
Recommended Readings
- Browse the PwC MoneyTree site.
- Browse the Goodwater Index site.
- Skim the executive summary of a sample business plan in Appendix A of the Technology Ventures textbook and the LinkedIn’s annotated pitch deck to a VC here.
- Skim “Introduction to Stock and Options” by David Weekly (advanced material so provided here only as a reference)
- Skim Brad Feld’s Term Sheet Series (advanced material so provided here only as a reference)
