24 August 2018
on course website
Entrepreneurial Finance and Going Public
The course is meant for students and practitioners with great interest in learning how start-ups and entrepreneurial firms attract funding through crowdfunding and forms of private equity (business angels, venture capital). We analyze how firms can bridge the moment between burning cash and becoming profitable (financial planning). Finally, we analyze how founders and early investors can exit the new venture through an initial public offering (IPO). We discuss why and how entrepreneurial firms go public. We analyze the entire transition process through which a private company becomes public by offering part of its equity to public shareholders.
The aim of this course is to provide students with insights into the complexities of attracting financing for start-ups and entrepreneurial firms. We follow the life-cycle of a new venture and discuss the various sources of financing. We analyze the possibilities of crowdfunding in launching a new idea or venture. What are the various forms of crowdfunding and how can they support a start-up. What are the limit of the crowdfunding channel?
Next we discuss different forms of private equity financing, starting from more informal business angel financing towards more formal funding through venture capitalists or private equity funds.
As young firms often burn a lot of cash before becoming profitable, we zoom in on financial planning and cash management. This is a very important aspect of firm survival and guiding the firm towards a more mature life-cycle phase.
When starting a new venture, the founders should also have an exit moment in mind. We discuss the exit possibilities for the founders, early investors and later-round investors. We discuss potential tensions between social values and financial values, between valuation and price of the venture. We analyze different valuation models to get more grip on the valuation process and gain insight in the negotiation process of selling a company.
Finally, we discuss going public as an important exit channel for entrepreneurial firms. We discuss the transition process through which a private company becomes public by offering part of its equity to public shareholders. We analyze the motives of companies to pursue a public listing at a stock exchange. What are advantages and disadvantages of going from a private to a public company? At what stock exchange to list? What is the value of a listing? Finally, we analyze the first trading days. How does the stock price evolve during the first trading days? Do we see price run-ups? What communication strategy does the company need to develop? What investor base to target?
By the end of the course, students should:
• Gain insight into the mechanisms of crowdfunding
• Gain insight into various forms of private equity in funding an entrepreneurial firm
• Understand the differences between business angels and venture capital
• Be able to develop and read a financial plan and understand cash management of start-ups
• Be able to conduct a basic valuation of a new venture.
• Have a broad understanding of the IPO process (going public).
• Understand and analyze the different of going public.
• Gain insight into investor communication issues
• Work successfully within groups to complete assignments and projects.
Certificate of Attendance
EUR 495: Course + course materials
EUR 200: Housing
on course website