Syllabus

Description

How much money can you raise at this difficult time? When should you raise it and from whom? What are the market standards and practices in structuring VC deals? How will your company be valued? These are key questions that face all entrepreneurs, and often have to be answered with insufficient data. This course aims to prepare you for these decisions, both as an entrepreneur and as a potential venture capitalist. 

15.391 examines the elements of raising early stage capital, focusing on start-up ventures and the early stages of company development. Emphasizing how the rules have returned to traditional standards in the post-bubble world, we will look at how to negotiate venture capital investments effectively in a very difficult funding environment.

The course consists of two primary components: live case studies and negotiation exercises. Using live interactions with leading figures in the venture finance community, most of the class sessions will analyze fundamental issues of the venture-capital investment process, with a particular focus on demystifying the legalities and jargon of the term sheet. 

During the course, students will work in teams to apply the principles in practical negotiations. In two rounds of simulations, the teams will travel to the offices of practicing lawyers and venture capitalists, and attempt to structure the best deal for their businesses. These exercises are designed to both help understanding of the venture capital process, and to foster relationships that can help students as they develop businesses.

Course Requirements

Regular Class Attendance

Participation in class will account for one-third of the grade. Students should be prepared to discuss the case in each class session. There will be friendly cold calling -- these are not clapping for credit war stories but rather live case studies in which participation is critical. Homework problems are preparation for the live cases and will be considered as another component of the class participation grade.

Attendance at every class is expected. Please talk to the professor if you need to miss a class. 

Simulations and Team Exercises

This will account for two-thirds of the grade. Grading will primarily reward the process of the exercises, including effectiveness of teamwork and thoroughness of preparation, rather than any particular result achieved.

Students will work in teams (typically three or four people) on three discrete projects: these are described in detail on the projects page.

  • Find a lawyer
  • Lawyer strategy round
  • VC negotiation round

Note

To accommodate the professional participants' schedule, the simulation rounds take place during the week, usually in the evening. You must be able to allocate ~2½ hours (including travel time) on two separate evenings. 

Very Important

There will also be an intra-team evaluation at the end of the course (team members get to say who did the work).

Other Important Points

  1. Guests will frequently agree to stay for coffee or an early beer after class to speak informally with a small group of students. The TA will be in charge of coordinating logistics. Please take advantage of these interactions.

  2. Please bring a face card on the first day of class.

  3. Auditors are welcome to the class sessions, as long as they do the readings and are willing to participate in discussions. Priority in seating will be given to those on the waitlist. Only registered students can take part in the simulation rounds.

  4. As this is an H2 (second half of term) only course, with heavy team interaction, it is strongly requested that students planning to drop the course do so before negotiation exercises commence. Please be fair to your colleagues.