FIN 544 Entrepreneurial and New Venture Financing
Fall 2000
Course schedule and selected lecture notes.
(Revised 8/20/2000)

Welcome to the Fin 544 course page !!!

The objective of this course is to analyze unique financial issues for entrepreneurial firms, by integrating both academic and practitioner's views.  There will be a series of classes with standard lecture format on the following topics: (I) the start-up process; (II) valuation methodologies; (III) venture capital cycle; (IV) IPO process; and (VI) valuation of new economy business.  Outside speakers will be invited to offer their insights on various topics covered in class.

Course Syllabus

There will be no required textbook for this course. Most classes will be conducted by reading and analyzing cases prepared by Harvard Business School (HBS). To order the HBS cases, visit the website http://www.hbsp.harvard.edu.

Exam #1 (posted 10/12/2000)

Problem for Leasing (posted 10/12/2000)

Link to the article "Initial Public Offerings" by Dr. Ritter

Assignment #3:  Valuing the IPO of Amazon.com (posted 10/22/2000)

Spreadsheet for calculating beta for Amazon.com (posted 10/27/2000)

Solution to the Problem for Leasing (posted 10/22/2000)

Solution to Problem # 6 of Exam 1 (posted 11/13/2000)

Annoucement (posted on 11/29/2000):

1. Correction for the solution to the leasing problem (correct numbers in red):

cash flows from purchasing:
                                            0                    1                    2                        3
    dept tax shield                                   350,000        350,000            350,000
    Net Cash Flow           (3,000,000)     350,000        350,000            350,000

2.  We are going back to room 308 in Burnham Hall for Exam #2 on 11/30/2000.
Please bring the cases ---"A Method for Valuing High-Risk Long-Term Investments (HBS #9-288-006)" and "Note on Free Cash Flow Valuation Models (HBS # 9-288-023) if you want to use them during the exam.

3.  For the valuation assignment, all the groups have the right answer for the beta and the   expected return on stocks:

    beta=2.67
    and expected return on stock= 5%+2.67*(10%-5%)=18.35%.

The final answer for the IPO price depends on the assumption you made on the growth rate of cash flows after year 2002. There will be single "correct" number for the IPO price.

Week 1: 8/24	Tentative lecture topic:	Introductory Overview
	Cases and Readings:	NA
	Lecture Notes:	Lecture #1
	Important dates:	NA

Week 2: 8/31	Tentative lecture topic:	Start-up Process Financing Perspective of Entrepreneurial Firms
	Cases and Readings:	Case:  Diamond in the Rough (A) Reading: How to Write a Winning Business Plan? Harvard Business Review, May-June, 1985.
	Lecture Notes	NA
	Important dates:	NA

Week 3:  9/7	Tentative lecture topic:	Angel Financing
	Cases and Readings	Case: Band of Angels (HBS # 9-898-188)
	Lecture Notes	NA
	Important dates:	Guest Speaker: Entrepreneur

Week 4: 9/14	Tentative lecture topic:	Valuation of Private Equity Investments
	Cases and Readings	Case:  Note on Free Cash Flow Valuation Models (HBS #9-288-023) Case: A Method for Valuing High-Risk Long-Term Investments (HBS #9-288-006)
	Lecture Notes	NA
	Important dates:	NA

Week 5: 9/21	Tentative lecture topic:	Introduction to Venture Capital Industry
	Cases and Readings	Paper: George Fenn, Nellie Liang, and Steve Prowse,  “The Private Equity Industry: An Overview,” (Financial Markets,  Institutions and Instrument Series, Volume 6, Number 4), Boston,  Balckwell Publichers, 1997. Paper: Bob Zider, How Venture Capital Works,  Harvard Business Review, November-December, 1998, p 131-139.
	Lecture Notes:	NA
	Important dates:	Guest speaker: Angel Investor

Week 6: 9/28	Tentative lecture topic:	Venture Capital and Deal Making:
	Cases and Readings	Case: Note on Financial Contracting “Deals” (HBS# 9-288-014)
	Lecture Notes	NA
	Important dates:	Guest Speaker: Venture Capitalist

Week 7: 10/5	Tentative lecture topic:	Venture Capital Cycle: Fund Raising
	Cases and Readings	Case: ARCH Venture Partners (VCPE; p101-125)
	Lecture Notes	NA
	Important dates:	Exam I

Week 8: 10/12	Tentative lecture topic:	Venture Capital Cycle: Investing
	Cases and Readings	Case: Onset Ventures (HBS # 9-898-154) Case: A Note on Venture Leasing Industries (VCPE; p318-327)
	Lecture Notes	NA
	Important dates:	NA.

Week 9: 10/19	Tentative lecture topic:	Venture Capital Cycle: Exiting
	Cases and Readings	Case: ImmuLogic Pharmaceutical Corp. (VCPE, p 389-420)
	Lecture Notes	NA
	Important dates:	NA

Week 10:10/26	Tentative lecture topic:	Venture Capital Cycle: Exiting
	Cases and Readings	Case: ImmuLogic Pharmaceutical Corp, (VCPE, p 389-420)
	Lecture Notes	NA
	Important dates:	NA

Week 11: 11/2	Tentative lecture topic:	Going Public:  How to do an IPO and IPO Valuation.
	Cases and Readings	Case: Amazon.com: Going Public
	Lecture Notes	NA
	Important dates:	CEO Conference: Nov. 2-4

Week 12:11/9	Tentative lecture topic:	IPO Underpricing
	Cases and Readings	Paper: Loughran, Tim, Jay Ritter, and Kristian Rydqvist, “Initial  Public Offerings: International Insights,” Pacific-Basin Finance Journal (June 1994), Vol.2, No.2, pp. 165-199.
	Lecture Notes	NA
	Important dates:	NA

Week 13: 11/16	Tentative lecture topic:	How Non Financial Information is Useful in Valuing a Firm:
	Cases and Readings	Paper: Z. Deng, B. Lev and F. Narin, "Science & Technology  as Predictors of Stock Performance," Financial Analysts Journal,  (May/June 1999), 20-32. Paper: E. Amir and B. Lev, "Value-Relevance of Nonfinancial Information: The Wireless Communications Industry," Journal  of Accounting and Economics, (1996), 3-30.
	Lecture Notes	NA
	Important dates:	NA