FIN-E0309 - Entrepreneurial Finance, Lecture, 2.3.2022-14.4.2022

LEARNING OUTCOMES

Credits: 6

Schedule: 02.03.2022 - 14.04.2022

Teacher in charge (valid for whole curriculum period):

Teacher in charge (applies in this implementation): Matti Keloharju

Contact information for the course (applies in this implementation):

Matti Keloharju
Email address: matti.keloharju@aalto.fi
Office: V309 (office hours by appointments)
Note: Please give any email the title “EF”.

Henry Kye (Co-Instructor)
Email address: henry.kye@aalto.fi
Office: T316 (office hours by appointments)
Note: Questions concerning exercises, grading, and details on course administration should be sent directly to co-instructor. Please give any email the title “EF”.

*Office may be closed due to Covid-19 restrictions

CEFR level (valid for whole curriculum period):

Language of instruction and studies (applies in this implementation):

Teaching language: English. Languages of study attainment: English

CONTENT, ASSESSMENT AND WORKLOAD

Content

• applies in this implementation

  This course uses a combination of lectures and exercises to provide an overview of entrepreneurial finance. The course is aimed for students interested in founding their own start-up company, those looking to start or work for a venture capital or a related organization, and students who expect to interact with either entrepreneurs or early-stage investors through their roles as management consultants, bankers, or others. Because of this, attention is given both to the perspective of an entrepreneur seeking financing and to the perspective of capital suppliers.

  The course will cover a wide range of issues including, but not limited to, pitching the entrepreneur’s financial plan, evaluation of entrepreneurial opportunities and the venture capital valuation method, term sheets and deal structuring, financing processes, investors’ roles in corporate governance, exit routes, venture capital funds and other early-stage investors, as well as the ecosystem surrounding entrepreneurial firms. Entrepreneurial finance is a combination of art and science, and an optimal quantitative solution may not always be found: market participants are required to make qualitative judgements under a high degree of information asymmetry and based on incomplete resources.

  Although venture capital financing will be covered in the course, the coverage of private equity will not be complete. More complete coverage of these topics is given in the Alternative Investments course (28E35700).

Assessment Methods and Criteria

• applies in this implementation

  Grades (max 103 points) are based on:
  o Negotiation Exercise: max 20 points
  o Exercise Sets: max 33 points
  o Final Exam: max 50 points

  In order to pass the course, you are required (1) to obtain a total of 50 points from the course and (2) to obtain 50% of the points available in the final exam. Provided that you pass these benchmarks and pass the course, your final grade is determined according to the table below by the total combined points earned from different graded course components:

  90≤x≤103: Final grade = 5
  80≤x<90: Final grade = 4
  70≤x<80: Final grade = 3
  60≤x<70: Final grade = 2
  50≤x<60: Final grade = 1
  0≤ x<50: Final grade = 0, Fail

  The course features an investment negotiation exercise and three smaller exercise sets. The same group consisting of four students will be used for all four pieces of exercises. Separate instructions, deadlines and other required information regarding the assignments will be distributed through the course’s MyCourses page.

  Note: The points earned from the exercises and the assignments are valid for one academic year from the start of the course (i.e. for the two exams held during the academic year 2021-2022).

DETAILS

Substitutes for Courses

• valid for whole curriculum period:

  Substitutes for Courses

Prerequisites

• valid for whole curriculum period:

  Prerequisites

FURTHER INFORMATION

Further Information

• valid for whole curriculum period:

  Teaching Language : English

  Teaching Period : 2022-2023 Spring IV
  2023-2024 Spring IV

  Enrollment :

  A maximum of 64 students can be accepted to the course.

  The course uses a waitlist and a pre-course assignment that is due on the day preceding the day of the first lecture. To confirm their attendance on the course, the admitted students are required to pass this assignment.
  
  Students at Aalto Finance M.Sc. programme (i.e. who have graduated as B.Sc.) will be prioritized when admitting students to the course. Students re-taking the course (grade already registered) will not be prioritized and can participate only if there are places remaining.

  Remaining seats are prioritized as follows:
  1. Finance M.Sc. exchange students from other universities
  2. Aalto Finance B.Sc. students with 150 credits and a finished B.Sc. thesis completed (registered in transcript of records)
  3. All other M.Sc. students at the School of Business
  
  Please follow carefully the registration deadlines of the courses and exams! Missing registration deadline automatically foregoes a prioritized seat for Finance M.Sc. students and puts prospective students at the bottom of the prioritization list.

• applies in this implementation

  Lectures: Class meets on Wednesdays and Fridays from 10.15 to 11.45, while exercise lectures are held on Thursdays from 10.15 to 11.45. Please see the preliminary schedule below for details, including the changed order of regular and exercise classes in the last week of the course. Lectures and other classroom activities are subject to change based on the development of the Covid-19 situation and Aalto University’s policies and guidelines.

  Closed-door policy: To facilitate an undisturbed learning experience, classroom door will be locked at the beginning of the class (10.15). Late comers will have the possibility to enter the class once in each class, at 10.30. (Do not knock the door until then!) After that, classroom door will remain locked until the end of the class.

Details on the schedule

• applies in this implementation

  The course schedule, subject to change, is the following:

  
  
  • [02.03] Lecture 1: Introduction & Evaluating a Business Opportunity (Ch 1, 2)
  • [03.03] Exercise Lecture 1: Ownership allocation & Venture Valuation (Ch 4, 5)
    
  • [04.03] Lecture 2: The Financial Plan (Ch 3); Deadline for group registration 
  • [09.03] Lecture 3: Term Sheets (Ch 3)
  • [10.03] Exercise Set #1; Deadline for selection of negotiation pair
  • [11.03] Lecture 4: Structuring Deals (Ch 7)
  • [14.03] Entrepreneurial Groups: Submission #1
  • [16.03] Lecture 5: Corporate Governance (Ch 8)
  • [17.03] Exercise Lecture 2: Staged Financing (Ch 4, 5, 9)
  • [18.03] Lecture 6: Debt Financing (Ch 10)
  • [21.03] Investor Groups: Submission #1
  • [23.03] Lecture 7: Exit (Ch 11)
  • [24.03] Exercise Set #2
  • [25.03] Lecture 8: Venture Capital (Ch 12)
  • [30.03] Lecture 9: Early-Stage Investors (Ch 13)
  • [31.03] Exercise Lecture 3: Investor Protection: Preferred securities & Anti-Dilution protection (Ch 6, 9)
  • [01.04] Lecture 10: Ecosystems (Ch 14)
  • [06.04] Lecture 11: Negotiation Exercise A; All groups: Submission #2
  • [07.04] Lecture 12: Negotiation Exercise B
  • [08.04] Exercise Set #3

Description