Lecture Notes

Lecture notes are available for the first two sessions.

1 Introductory Class: Logistics (PDF)

Discussion of the syllabus, course goals and structure. Explanation of the simulation rounds, beginning with "find a lawyer" assignment. All deliverables will be discussed in detail. Discussion of informal coffee gatherings with guests pre/post class.
2 Term Sheets 101 (PDF)

Introductory class on term sheet jargon and basic legal concepts. Lecture assumes no prior experience in venture finance. Time allocated to finalize team composition and complete sign up procedures.
3 Successfully Raising Money from VCs

Guest: Tom Jones, founder and CEO, EXIT41 and Elm Square Interactive
1. How can you raise investment capital in this difficult funding environment?

2. What are venture capitalists looking for today? How can an entrepreneur convince potential investors?

3. What are the key issues to think about in successfully negotiating a term sheet?
4 Seed Financing: Strategy for Getting to a Term Sheet

Guest: Karl Büttner, Chairman, Co-Founder and CTO, 170 Systems

1. What does an entrepreneur need to do before even trying for a formal term sheet?

2. Who are the sources of seed financing and what are they looking for?

3. What are the advantages and disadvantages of pursuing seed money?

Sector Focus: Biotech

Guest: Tuan Ha-Ngoc, President & CEO, GenPath Pharmaceuticals
1. How does raising money for a biotech firm differ from high tech?

2. What priorities should first time biotech entrepreneurs set in approaching A round funding negotiations?

3. What should biotech entrepreneurs look for in their VCs, in today's environment?
6 Angel Financing: 2 Approaches

Guests: Bob Greene, angel investor and former Managing General Partner, Flatiron Partners; James Geshwiler, Executive Director, CommonAngels
1. What are the primary advantages and disadvantages of seeking angel financing in 2003?

2. What are the priority considerations for entrepreneurs contemplating angel investors?

3. How do later round VCs view angel investors?

4. How does angel investment differ from conventional first round funding, from a term sheet perspective?
7 Compare and Contrast Lawyer Rounds

Update on Deal Trends

Guest: Mark Macenka, Partner and Chair of the Business Practice Group at Testa, Hurwitz & Thibeault.

Mid-course review

Goal is to leverage value of other teams' lawyer round experiences in preparing for upcoming VC rounds. We will compare basic benchmarks, advice and strategy to determine how "standard" prevailing market standards are. We will also undertake a broader discussion on the utility of lawyers in developing strategy, and in managing lawyers in the real world.
8 VC Negotiation: What Matters, What Works, What Doesn't

Guest: Elliot Katzman, Partner, Kodiak Venture Partners
1. With experience as both a successful entrepreneur and investor, how do you think strategically about VC negotiations?

2. What provisions in the term sheet do you consider most critical? Why?

3. What cues, verbal and nonverbal, do you look for or watch out for in your negotiations with entrepreneurs?

4. How do you balance pure valuation against the so-called non-financial provisions in term sheet negotiations?
9 Sector Focus: Raising First Round Money in Biotech

Guest: Jonathan Fleming, General Partner, Oxford Bioscience Partners
1. What is different about raising capital for biotech?

2. How are these differences reflected in the term sheets initially offered in this industry?

3. What can you reasonably expect to achieve in a biotech-related term sheet?

4. Tuan Ha-Ngoc, the CEO for GenPath, has been a guest in our class. Oxford just invested in their last $40M round. How did you as the VC approach the financing negotiations?
10 Going Global: Raising First Round Money for International Ventures

Guest: Mikko Suonenlahti, Partner, 3i
1. What are the primary pitfalls-economic, cultural, legal and otherwise-that derail entrepreneurs seeking early stage international VC investment, and how can they best be avoided?

2. How does the evaluation process for new ventures differ in VC firms that invest internationally?

3. From a term sheet perspective, what are the unique considerations involved in negotiating such an investment?
11 Conclusions

Comparisons and contrasts of VC rounds, in substance and process
1. What have you learned from this course (distinguish between class sessions and the negotiation simulations)?

2. What were the most serious mistakes you made in your negotiations?

3. What potential issues among team members are you now more aware of?