Course Code: Module D 2011 Boston-MBA Title Instructor: Professor William Hancock william.hancock@hult.

edu (put course name in subject line) Mobile: 857-928-6391 Office Hours: By appointment, before and after class and as needed Level: Master, Level 7 Credit: 3 Course Description:

A new business does not have the financing opportunities of an established business. The purpose of this course is to present effective financial and business techniques necessary for a successful business start-up. The course covers the essential tools and know-how you need to build a sturdy financial foundation for a profitable business. A practical road map is developed to guide the student in crafting a meaningful business plan, fund raising, business execution needed to bringing the business to the next level, and developing an exit strategy. The course offers potent methods for how entrepreneurs can keep financial control of their enterprise and insightful tips for avoiding the multitude of financial barriers that may block their entrepreneurial dream. Pedagogical Approach: The Hult LEAP Method 1. Learn Students are presented a roadmap to financing a new business from the start-up stage, through various growth stages and the final harvesting stage. Sources of new business financing are explored with special emphasis on venture capitalist. Valuation techniques used by financing sources are discussed as the new business gains business value. Real world business examples and cases are used to gain some experience in how a new company is viewed by financing resources.

Entrepreneurial Finance 2 Syllabus Mod. D 2011 Boston MBA

2. Experience
Students will develop their skills with case study analysis and exercises. When possible, guest lecturers will be invited to speak. 3. Action Project Students, working in teams, will conceive of a new product/service to be developed by a start-up company. A business plan will be presented, both written and in a final presentation to their peers, which will cover the valuation and financing of the new company through its growth stages, and an exit plan to harvest the investors investment. Learning outcomes At the completion of the course, students will have had the opportunity to gain knowledge and skills in the following areas. A. Knowledge and understanding Understanding of the business enterprise and its role in national and global economies Understanding of similarities between new and mature businesses Understanding of financial resources available to a business B. Cognitive/intellectual skills: Strategy development based upon synthesizing external and internal operational and financial environments Ability to develop financial solutions based upon partial data C. Subject/professional skills Preparation of a business and financial plan Financial statement analysis Cash management Valuation of the business Working capital management

D. General/Transferable skills Team performance (multi-team assignment deliverables) Problem solving based on incomplete information Ethical conduct and decision making

Methods of Teaching: 1. Interactive lectures will be given during class. 2. Student independent research on factors of entrepreneurship 2. A series of mini and full case studies will be assigned to student teams. 3. Capstone case competition will be performed by student teams.

Entrepreneurial Finance 3 Syllabus Mod. D 2011 Boston MBA Course Assessment 50% team case studies 20% student class participation 30% final case competition 5% elevator talk 5% product/service description 20% final presentation

Course Materials 1. TEXT: Entrepreneurship Finance; J. Chris Leach and Ronald W. Melicher; 4 . edition; (2012); SouthWestern Cengage Learning; ISBN: 0-538-47815-2. 2. Harvard Business School Case: Smartix-Swinging for the Fences HBS #5-809-134 (course pack) 3. Harvard Business School Case: Amazon.com-Going Public HBS #9-899-003 (course pack) 4. HBS Reprint 9-802-131 (Rev. 8/1/2006) New Venture Financing (course pack) 5. HBS Reprint 97409 "How to Write A Great Business Plan" by William A. Sahlman (course pack) 6. "A Note on Valuation of Venture Capital Deals , Stanford Graduate School of Business Case E-95 (rev. 4/20/06) by Thomas Hellmann (course pack) 7. Avery Products (Hult Online) 8. Ellis Printing (Hult Online) 9. Parable of the Sadhu (Hult Online)
rd

MBA Course ScheduleClass start time 1000 hours

UNIT 1 2 3 4 5 6 7 8 9 10 MBA Date 7/7/2011 7/7 7/11 7/11 7/12 7/12 7/13 7/13 7/14 7/14 UNIT 11 12 13 14 15 16 17 18 19 20 MBA Date 7/15 7/15 7/18 7/18 7/19 7/19 7/20 7/20 7/21 7/21

Schedule subject to change.

Entrepreneurial Finance 4 Syllabus Mod. D 2011 Boston MBA

Course Assignments UNIT 7/7/2011 7/7/11 1 2 SUBJECT What is an Entrepreneur? The Business Plan 1 READING Chapter 1 2 + How To Write A Great 1 Business Plan 2 3+ New Venture 8 Financing 4 5 5 6 7 7 8 9 10 10+ A Note on Valuation of Venture Capital 9 Deals 11 + Behind the curtain of 7 VC funding 12 13 14 15 ASSIGNMENT DUE Survey (in class)

7/11 M 7/11 M

3 4

The Business Plan 2 Discussion of final team project Organizing A New Venture

Submit team members

7/12 TU 7/12 TU 7/13 W 7/13 W 7/14 TH 7/14 TH 7/15 F 7/15 F 7/18 M

5 6 7 8 9 10 11 12 13

Measuring Financial Performance Evaluating Financial Performance 1 Evaluating Financial Performance 2 Short and Long Term Financing Financial Capital 1 Financial Capital 2 Ethics & Legal Issues of Raising Capital Valuation of the Early-Stage Venture Venture Capital Valuation Methods 1

Submit team firms product/service Elevator talk in class 2 Case: Avery Case: Ellis Printing Case: Parable of 5 the Sadhu 4 Case: Smartix Submit team business plan outline
3

7/18 M

14

Valuation of the Firm

7/19 TU

15

Working with Venture Capitalist

7/19 TU 7/20 W 7/20 W 7/21 TH 7/21TH

1 2

16 17 18 19 20

Other Financial Alternatives Equity Investments and Derivatives Exit Strategy Turnaround Troubled Ventures Capstone Team Project

Case: 6 Amazon.com

Team Presentation Team Presentation

How to Write a Great Business Plancourse packet Avery Products Hult Online 3 Ellis Printing Hult Online 4 HBS case Smartix- course packet 5 Parable of the Sadhu- Hult Online 6 HBS case Amazon.com course packet 7 Behind the curtain of VC funding from INC, May 2010-Hult Online 8 New Venture Financing-HBS Reprint 9-802-131-course pack 9 A Note on Valuation of Venture Capital Deals, Stanford Graduate School of Business, Reprint E-9 course pack

Entrepreneurial Finance 5 Syllabus Mod. D 2011 Boston MBA

Note: the assignments due are likely to change as we experience the work flow.

The topics below are suggestions you may wish to research to be better able to participate in class discussion. These assignments are optional. It is not expected that you will have time to explore all of the topics.

UNIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

SUBJECT What is an Entrepreneur? The Business Plan 1 The Business Plan 2 Organizing A New Venture Measuring Financial Performance Evaluating Financial Performance 1 Evaluating Financial Performance 2 Short and Long Term Financing Financial Capital 1 Financial Capital 2 Ethics & Legal Issues of Raising Capital Valuation of the Early-Stage Venture Venture Capital Valuation Methods 1 Valuation of the Firm Working with Venture Capitalist Other Financial Alternatives Equity Investments and Derivatives Exit Strategy Turnaround Troubled Ventures

TOPIC Identify 1 or 2 local start-up companies How a business plan differ from start-up and mature company Forms of organization and pros/cons Software to help new company (www.nolo.com) Work.-Life Balance (www.inc.com) How can economic news impact your company What is the interest rate structure in your country? How do you register stock in your country? Example of ethical business breakdown How would you value a start-up? How does P/E vary with risk and growth? Look for venture capital web site. Summarize history and current events Get price of option and underlying stock Describe a firm in liquidation or bankruptcy. Possible source www.wsj.com

Entrepreneurial Finance 6 Syllabus Mod. D 2011 Boston MBA INSTRUCTIONS FOR THE ELEVATOR TALK The elevator scenario is that you enter an elevator and suddenly are standing next to a partner in a leading Silicon Valley venture capitalist. You realize you have an incredible opportunity to present your idea for a new business with the hope of securing funding. Of course you would like to obtain immediate funding, but realistically you hope to get a follow-on meeting with the venture capitalist. You will have one-minute to present your idea and explain why the VC should want to invest in your business. The business is the business for which your team has decided to prepare a business plan as the class final project. Each student team will come to the front of the class. Each team member will present their elevator talk. The class will vote on who did the best job. CASE STUDIES Given the limited time you have to work on the cases, I have prepared specific questions for you to answer when completing the case. Cases will be done as a team, with each team member receiving the same team grade. You should present a full discussion of each question. For example, the first question, should you accept the offer from MSG? requires more than just a yes or no answer, but also requires the rationale for your answer.

SMARTIX 1. Imagine you are Vivek Khuller. Should you accept the offer from MSG? 2. Should Vivek have tried to start this venture without co-founders? Could he have been a solo founder? Explain your answer. 3. Discuss the team members Vivek chose. Were they good choices? 4. Assess the equity split process that Vivek initiated, in particular its timing, criteria, and the people involved in the decision. AMAZON.COM 1. Why did Jeff Bezos choose books at the initial category for launching his new company? 2. What is the business model for Amazon.com? How does their business model differ from that of Barnes & Noble or Borders? How would you value Amazon.com? 3. Should Amazon.com go public? Why or why not? 4. What are plausible scenarios for the period leading up to a final pricing meeting, which typically takes place the night before an IPO? How should management respond to these scenarios (e.g., is there a price below which Amazon.com should not go public)? 5. What should Joy Covey, the CFO, do?

Entrepreneurial Finance 7 Syllabus Mod. D 2011 Boston MBA FINAL PROJECT AND TEAM PRESENTATION Each team will conceive of a new business idea for which they will prepare a business plan to be presented to a venture capitalist. The plan should cover the business plan topics discussed in class. The plan does not need to include sections on operations and human relations. Of special interest are the management section, the financial section, whats in it for the VC, and an exit strategy. There are three parts to the final project: Elevator talk (5% of final grade) Written business plan (10% of final grade) Final presentation (15% of final grade) At the conclusion of the team presentations, the class will vote on the best presentations.