Insegnamento a.a. 2013-2014

Classes: 31 (I sem.)

Instructors:
Class 31: CLAUDIO ZARA

Students who attend this course learn what the characteristics and main issues affecting venture and development capital activity are. This industry is increasingly gaining relevance both in the field of firm financing and as an asset class in investment portfolios. In 2011 in Europe venture capital firms invested € 45.5 billion in 5,011 companies and they raised € 23.7 billion of new funds for investment purposes. The learning goals are as follows:

• how the fundamental financial theories work in the venture capital industry;
• venture capital as an asset class and its investor categories;
• which are the target companies venture capitalists wish to invest in;
• management of the investment process, target valuation and monitoring the way out.

• What is Venture Capital and why it exists.
• Venture and development capital: an industry overview.
• Investor categories who place funds in venture capital industry (financial investor, corporate venture capital, government and local authorities, informal investors).
• How to regulate relationships between general and limited partners within investors organisation (incentives schemes, disclosure and accountability, how to share profits between parties).
• How to invest: legal framework, strategies and vehicles.
• What makes venture capital target firms special and when and why they are not able to raise capital in the debt market.
• Solutions from venture capitalists to firm needs. Relationships between entrepreneur and investor.
• Investment criteria and investment styles (round financing, milestones, venture debt).
• Investment valuation: business plan, deal structuring, valuation criteria and expected IRRs.
• Management of the way out: how and when to exit from the investment.

Two different methods: written exam and group assignment (optional).
For attending students
The assessment process is divided in three parts: a) check tests handed out during the course on a regular base (multiple choice questions, weight 40%); b) a final exam (a set of open questions, weight 60%); c) a group assignment (an option to obtain extra points a maximum of 4).
The grade from the check tests can be used only once within the February exam date. The grade from the assignment will expire at the end of the current academic year.
For non-attending students or attending students who did not take, or pass, the check tests there is one final exam (a mix between multiple choice and open questions).

• J. Smith, R. Smith and R. Bliss, Entrepreneurial Finance. Strategy, Valuation and Deal Structure, Stanford University Press, 2011, (only some sections)
• Some working papers/case histories distributed on the course e-learning web site.