Venture capital and private equity
A.A. 2023/2024
Obiettivi formativi
The course aims at providing students with a deep understanding of the private equity and venture capital businesses, and on how such sophisticated equity investors fundraise, valuate, invest, manage and exit from their portfolio companies to realize a financial return. The course conveys theoretical knowledge but also practical analytical tools, such as valuation techniques. The analysis of real case studies in class, and the assignment of cases to be solved in teams ensures that the course has a strong practical component
Risultati apprendimento attesi
By the end of this course, students will be able to:
· Illustrate the distinct phases of the venture capital lifecycle (from fundraising to exiting), the actors involved and the most important features of the contracts managing the relationships between such actors
· Illustrate the concept of dilution, and quantify the financial consequences of dilution of existing shareholders in subsequent financing rounds
· Describe how Private Equity investors realize a financial return, in venture capital, growth equity and buyout transactions
· Correctly interpret the terminology of venture capital term-sheets, and compare different term sheets to identify the most favourable conditions for entrepreneurs
· Apply the "Venture Capital" method to compute the post money evaluation of a start-up
· Illustrate how the different ownership structure of Venture Capital investors (Independent, Corporate or Governmental) influence their investment behaviour.
· Illustrate the distinct phases of the venture capital lifecycle (from fundraising to exiting), the actors involved and the most important features of the contracts managing the relationships between such actors
· Illustrate the concept of dilution, and quantify the financial consequences of dilution of existing shareholders in subsequent financing rounds
· Describe how Private Equity investors realize a financial return, in venture capital, growth equity and buyout transactions
· Correctly interpret the terminology of venture capital term-sheets, and compare different term sheets to identify the most favourable conditions for entrepreneurs
· Apply the "Venture Capital" method to compute the post money evaluation of a start-up
· Illustrate how the different ownership structure of Venture Capital investors (Independent, Corporate or Governmental) influence their investment behaviour.
Periodo: Secondo trimestre
Modalità di valutazione: Esame
Giudizio di valutazione: voto verbalizzato in trentesimi
Corso singolo
Questo insegnamento può essere seguito come corso singolo.
Programma e organizzazione didattica
Edizione unica
Responsabile
Periodo
Secondo trimestre
Programma
This course is organized over 10 weeks. Each week we will cover a new topic: besides theoretical frontal lectures, we will have more interactive practical lectures 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 Refinitiv, 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 and other valuation techniques
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. Special topics and group presentations: special topics might include: angel investors, corporate venture capital investors, crowdfunding, peer to peer lending and the fintech revolution, governmental support to venture capital (the role of the EIF, and government venture capital investors), venture debt, impact investing
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 and other valuation techniques
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. Special topics and group presentations: special topics might include: angel investors, corporate venture capital investors, crowdfunding, peer to peer lending and the fintech revolution, governmental support to venture capital (the role of the EIF, and government venture capital investors), venture debt, impact investing
Prerequisiti
There are no formal prerequisites, but taking corporate finance class is highly recommended
Metodi didattici
Lectures, valuation exercises, case-studies presentations, testimonials from practitioners (entrepreneurs, business angel investors and venture capital investors)
Materiale di riferimento
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 in the course webiste.
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 in the course webiste.
Modalità di verifica dell’apprendimento e criteri di valutazione
The 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.
Attending students can have 1 point bonus if they submit an optional individual assignment in which a specific topic is analyzed.
Non-attending students are those unable to participate in at least 80% of classes. The inability to attend class needs to be justified via email (e.g., Erasmus students, working students ). Class attendance is strongly encouraged for this course.
- Final written exam (80%)
- Groupwork (20%)
The groupwork will be a valuation exercise.
Attending students can have 1 point bonus if they submit an optional individual assignment in which a specific topic is analyzed.
Non-attending students are those unable to participate in at least 80% of classes. The inability to attend class needs to be justified via email (e.g., Erasmus students, working students ). Class attendance is strongly encouraged for this course.
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