(Formerly Law 465) This course introduces the operation of the venture capital industry from both a theoretical and practical perspective. The course tracks the start-up process from initial formation of a new venture through its private capitalization, the navigation of typical operational or strategic hurdles/milestones, and potential exit through merger/acquisition or initial public offering. The class will analyze each step in the process from the perspective of the business entity, of the founder-employees, and of the venture backers. It also will consider the incentive mechanisms and control structures used at each step of the transaction (and alternatives to these structures), with a focus on both the underlying economic and financial theory, as well as on pragmatic considerations in structuring the transactions. Students are required to complete a term sheet negotiation exercise, participate in class discussions and related short assignments, and sit for an examination. Special Instructions: some modest background in financial analysis or Excel, such as might be obtained in QM finance (Law 467), is recommended for this course. Elements used in grading: Class participation/assignments, term sheet negotiation exercise written summary, and the final exam (In-School, Essay and Objective, closed book).
