This course examines the operation of the venture capital industry from both a theoretical and practical perspective. The course follows the start-up process from initial formation of a new High-Tech venture through its private capitalization, the negotiation of strategic alliances, and potential exit through merger or initial public offering. We will analyze each step in the process from perspective of the entity, of the founder-employees, and of the venture backers. We will also consider the incentive mechanisms and control structures used at each step of the transaction, and will focus on both the underlying economic and financial theory, as well as on pragmatic considerations in structuring the transactions. We will place particular emphasis on the negotiation of venture-backed investments into new enterprises and the structure of the VC industry itself.
Students will be required to complete a term sheet negotiation exercise, offer a written analysis of scholarship relating to the venture capital process, and sit for a written examination.
There will be a series of visitors from practice with extensive experience in the VC process, including several leading local western capitalists.
Special Instructions: Any student may write a paper with consent of the instructor in lieu of the exam.
Prerequisites: Corporations (Law 242) .