Private Equity and Venture Capital
A.Y. 2020/2021
Learning objectives
The course aims at providing students with theoretical knowledge and analytical tools to evaluate financing opportunities for prospective entrepreneurs and more mature companies. Specifically, students will be provided with knowledge of the most current theories of corporate finance. The course will focus on how the financial needs and financial opportunities of companies evolve with their life-cycle, with a particular attention to the case of start ups. Moreover, the functioning of the most established financial alternatives, such as bank finance, venture capital, private equity, secondary markets will be covered, together with the most recent trends in the provision of entrepreneurial finance, due to the fintech revolution, the rationale of government intervention in entrepreneurial finance, and the opportunities emerging from such intervention.
Expected learning outcomes
By the end of the course the students will gain knowledge of:
The most current theories of corporate finance,
How the financial needs and financial opportunities of companies evolve with their life-cycle, with a particular attention to the case of start ups,
The functioning of the most established financial alternatives, such as bank finance, venture capital, private equity, secondary markets
The recent trends in the provision of entrepreneurial finance, due to the fintech revolution
The rationale of government intervention in entrepreneurial finance, and the opportunities emerging from such intervention.
In terms of practical tools and skills, the students will be able to:
Develop a valuation report for a start up
Read a venture capital or private equity term sheet and contract
Consider the advantages and disadvantages of different financing opportunities
The most current theories of corporate finance,
How the financial needs and financial opportunities of companies evolve with their life-cycle, with a particular attention to the case of start ups,
The functioning of the most established financial alternatives, such as bank finance, venture capital, private equity, secondary markets
The recent trends in the provision of entrepreneurial finance, due to the fintech revolution
The rationale of government intervention in entrepreneurial finance, and the opportunities emerging from such intervention.
In terms of practical tools and skills, the students will be able to:
Develop a valuation report for a start up
Read a venture capital or private equity term sheet and contract
Consider the advantages and disadvantages of different financing opportunities
Lesson period: First trimester
Assessment methods: Esame
Assessment result: voto verbalizzato in trentesimi
Single course
This course cannot be attended as a single course. Please check our list of single courses to find the ones available for enrolment.
Course syllabus and organization
Single session
Responsible
Lesson period
First trimester
The course will be delivered completely online.
Asynchronous lessons will take place on Monday. The teacher will prepare videos with theoretical lessons that will be made available to students on Microsoft Teams before the beginning of the lesson.
On Fridays, synchronous lessons will take place. The teacher and students will meet online on Microsoft Teams during class time. The lessons will be recorded and made available to students on Microsoft Teams.
The final exam will be written and will take place online using the Moodle platform and the Safe Exam Browser. Group work will not undergo any changes.
Asynchronous lessons will take place on Monday. The teacher will prepare videos with theoretical lessons that will be made available to students on Microsoft Teams before the beginning of the lesson.
On Fridays, synchronous lessons will take place. The teacher and students will meet online on Microsoft Teams during class time. The lessons will be recorded and made available to students on Microsoft Teams.
The final exam will be written and will take place online using the Moodle platform and the Safe Exam Browser. Group work will not undergo any changes.
Course syllabus
This course is organized over 10 weeks, with 2 lectures per week. Each week we will cover a new topic: first with a theoretical frontal lecture, and then with a more interactive practical lecture during which we will discuss real cases and solve numeric exercises. We will also learn to use some of the resources of the University library, including EIKON, Zephyr and Orbis, useful to carry out quantitative analyses.
1. Introduction to the course and theory of corporate finance and entrepreneurial finance: trade off theory, agency theory, pecking order theory, information asymmetries and financial constraints
2. An overview of Private Equity and Venture Capital: the role of PE and VC in the entrepreneurial finance ecosystem, history, market trends and figures, in Europe and in the USA
3. Venture Capital - the fundraising phase: role of limited partners, general partners, venture capital funds, Limited Partnership Agreement.
4. Venture Capital - the investing phase: Screening, pre-money valuation, post-money valuation, contracting, syndication, staging, dilution.
5. Venture Capital - contracting: analysis and comparison of venture capital term sheets
6. Venture Capital - valuation: the Venture Capital method
7. Venture Capital - the holding phase: the non-financial value added, reputation of venture capital investors
8. Venture Capital - the divesting phase: the initial public offering, trade sale, withdraw
9. Later stage Private Equity: growth equity, buyouts, distressed financing
10. Debt and other investors: bonds and loans, angel investors, corporate venture capital investors, crowdfunding, peer to peer lending and the fintech revolution, public investors
1. Introduction to the course and theory of corporate finance and entrepreneurial finance: trade off theory, agency theory, pecking order theory, information asymmetries and financial constraints
2. An overview of Private Equity and Venture Capital: the role of PE and VC in the entrepreneurial finance ecosystem, history, market trends and figures, in Europe and in the USA
3. Venture Capital - the fundraising phase: role of limited partners, general partners, venture capital funds, Limited Partnership Agreement.
4. Venture Capital - the investing phase: Screening, pre-money valuation, post-money valuation, contracting, syndication, staging, dilution.
5. Venture Capital - contracting: analysis and comparison of venture capital term sheets
6. Venture Capital - valuation: the Venture Capital method
7. Venture Capital - the holding phase: the non-financial value added, reputation of venture capital investors
8. Venture Capital - the divesting phase: the initial public offering, trade sale, withdraw
9. Later stage Private Equity: growth equity, buyouts, distressed financing
10. Debt and other investors: bonds and loans, angel investors, corporate venture capital investors, crowdfunding, peer to peer lending and the fintech revolution, public investors
Prerequisites for admission
Corporate Finance course is highly recommended
Teaching methods
Lectures, valuation exercises, case-studies presentations, testimonials from practitioners (if possible)
Teaching Resources
Metrick A., Yasuda A. Venture Capital and the Finance of Innovation, Wiley (2010)
Prahl M., White B., Zeisberger C. Transformation via Private Equity, Venture Capital, Minority investments and Buyout, Wiley (2017)
The course slides and supplementary readings will be uploaded on Microsoft Teams
Prahl M., White B., Zeisberger C. Transformation via Private Equity, Venture Capital, Minority investments and Buyout, Wiley (2017)
The course slides and supplementary readings will be uploaded on Microsoft Teams
Assessment methods and Criteria
Their final grade of both attending and non attending students is based on two components:
- Final written exam (80%)
- Groupwork (20%)
The groupwork will be a valuation exercise.
- Final written exam (80%)
- Groupwork (20%)
The groupwork will be a valuation exercise.
SECS-P/11 - FINANCIAL MARKETS AND INSTITUTIONS - University credits: 9
Lessons: 60 hours
Professor:
Quas Anita
Professor(s)