Entrepreneurial Finance

Lecturer: 

John Cadle

Introduction and Aims

The module aims to provide the student with an understanding of early stage (venture capital) and late stage (buyout) external equity funding of potential growth businesses in Europe and the US, and an idea of trends in such provision around the globe. To do this we develop the theory of venture capital, discuss the structure of venture capital contracts and provide some global statistics on trends in VC investments.

The module also uses a set of tailored case studies of VC-backed businesses to embed the ideas. Assignments are business plans for raising equity to fund a startup or equity and debt to fund a buyout.

Objectives and Learning Outcomes

By the end of the module students should be able to:

  • Understand the differences and similarities of VC funding from other kinds of finance.
  • Understand the structure of and trends in VC investment around the world.
  • Understand the structure of the typical VC contract for Early and for Late stage businesses.
  • Understand the two agency relationships involved in VC funding and how contracts help resolve the agency problems they address.
  • Understand the venture capital cycle.
  • Understand the reasons why VC investment is staged and often syndicated.Understand the role of leverage in Buyouts, its benefits and risks.
  • Understand the factors determining when a company will be sold via an IPO or Trade sale.
  • Understand how to make money from buyouts and how to mitigate the risk of failure.
  • Be able to present a viable business plan for a startup or buyout business to a panel of venture capitalists.

Assessment 

  • 5,000 word individual business plan (100%)