The purpose of this course is to explore the specific key aspects of the many dimensions of seed-stage venture creation and growth in new venture formation. The course will be concerned with new venture (seed-stage) business formation and implementation issues that relate to conceptualizing, developing and managing successful new ventures. These issues include corporate governance, entrepreneurial financing, competition, negotiation of term sheets and special issues related to seed-stage firms concerning intellectual property and technology transfer.
In this course, a seed-stage venture is defined as a start-up business with a high growth potential that distinguishes itself from existing companies through innovation – for example, through an innovative product or service. In particular, the seed-stage venture will have the potential for wealth creation well beyond salaries for its founders and employees. This type of start-up has access to capital from private equity markets -venture capital and angel investment, as well as through grants and loans.
Most new companies fail. They need capital so that they can invest in infrastructure and in people. Investors know this and are concerned with the loss of their capital in new business deals. This conundrum is solved through the venture capital method of investing focusing on niche investments that have explosive market growth potential. In this course, we shall examine the business structures necessary to accept private capital, public and private venture capital as well as angels and angel investment, how a seed-stage venture can align its business model and monetary needs with those of high risk investors and procure financing. In addition, we shall examine multistage venture financing, necessary deal terms, negotiating term sheets, the valuation of seed-stage ventures and special issues for small organizations related to competition and compensation all of which are related to leveraging a seed-stage venture off the tarmac.
The course will be taught in lecture format but encourging heavy student in-class participation throughout the half-semester. Examples of the issues involved with seed-stage ventures will be taken from life science companies.
The course will appeal to individuals who desire to become entrepreneurs, those who consider joining start-up companies as employees and students who intend to work in the venture capital industry or in professional businesses supporting entrepreneurial firms will benefit from the course.
Humax Social Capital Assessment All students must complete an on-line social capital assessment and write a 3 page memo discussing the results. Instructions will be provided in class.
Second year student status or permission of the instructor.
A key function of the entrepreneur, as manager, is to raise money for the organization from private individuals, private equity firms and grants. This requires structuring the company to be able to accept money from these sources as well as an understanding of these sources of revenue and how to deal with them. To accomplish these ends a detailed understanding in several key areas will be sought: business types and corporate governance, entrepreneurial financing from angel and venture capital firms and under what terms is such financing reasonable, the Venture Capital Method, Capitalization Tables, raising money from grants, negotiation, negotiation of term sheets and IP, as well as the problems of competition and scarce resources in new ventures.
There will be one lecture section devoted to an in class negotiation. Students will divide into investors and entrepreneurs and negotiate a term sheet, determine post money valuation and share price for a B round of funding for an ag-bio company.