Venture Capital

This course examines the venture capital (VC) ecosystem from both a theoretical and a practical perspective. The course traces the start-up process from initial formation of a new venture through angel investments and institutional venture capital financing rounds, and potential exits through acquisition or initial public offering. The class will analyze each step in the process from the perspective of the company, the founders and employees, the investors, and counsel for the various parties, and their respective fiduciary and ethical duties. It also will consider the incentives and control structures deployed at each step of the process, with a focus on both the underlying economic and financial theory, as well as on pragmatic considerations in structuring the transactions. Students will learn the VC business model, what distinguishes it from other investment models and how that impacts entrepreneurs and innovation. We will also discuss the gender and racial diversity of startups and the venture capital firms. Some class sessions will include guest speakers with experience in venture capital or entrepreneurship. We will strive to make the classes highly interactive. There will be required readings for each session that include a range of materials from VC practitioners' blog posts to model deal documents, applicable statutes and substantive case law. We will also review a full set of typical venture capital deal documents, drafting considerations, relevant statutory and case law, essential valuation concepts and basic tax considerations. Simple spreadsheet exercises will be included to illustrate financial impacts of different deal terms, but no prior experience in creating spreadsheets is required. Students will be expected to contribute to class discussions, participate in teams in a term sheet negotiation exercise and complete a take-home, open book final examination. The course is open to Graduate School of Business and other non-law students with permission of the instructors.