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2013/2014 KAN-CM_F91 Venture Capital and Private Equity
| English Title | |
| Venture Capital and Private Equity |
Course information |
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| Language | English |
| Exam ECTS | 7.5 ECTS |
| Type | Elective |
| Level | Full Degree Master |
| Duration | One Semester |
| Course period | Autumn
Changes in course schedule may occur Thursdays 14.25-17.00, week 36-46 |
| Time Table | Please see course schedule at e-Campus |
| Max. participants | 60 |
| Study board |
Study Board for MSc in Economics and Business
Administration
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| Course coordinator | |
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| Teacher: Martin Vang
Hansen
Administration: Sabrine Josephine Schmidt - sjs.fi@cbs.dk |
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| Main academic disciplines | |
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| Last updated on 20-03-2013 | |
| Learning objectives | |||||||||||||||||||||||
The objective of this course is to
make the student familiar with the language, practices, and metrics
employed by venture capital (VC) and private equity (PE)
professionals. More precisely, the learning objectives of the
course are:
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| Course prerequisites | |||||||||||||||||||||||
| The students are required to have a standard Master’s level course in Corporate Finance. | |||||||||||||||||||||||
| Prerequisites for registering for the exam | |||||||||||||||||||||||
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Compulsory assignments
(assessed approved/not approved)
4 assignments. |
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| Examination | |||||||||||||||||||||||
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| Course content and structure | |||||||||||||||||||||||
| Investments in privately held firms
(i.e. in firms not listed on a public exchange) have received
increased attention in recent years. One important subset hereof,
venture capital (VC), is equity capital provided to early-stage,
high-potential, high risk start-ups. Another is equity in firms
taken over in leverage buy-outs, i.e., debt-based acquisitions of
mature companies. The latter is often just referred to as private
equity (PE), and this course will also use this term for such
investments.
Venture capitalists are concerned with the financing of entrepreneurship – a popular focus of discussion among businesspeople, financiers, economists, and policymakers. At a macro level, economists and policymakers have increased their attention to the entrepreneurial enterprise because of its importance to economic growth and the significance of entrepreneurial businesses in job creation. The capital market for financing such entrepreneurs – and private equity investing more generally – differs fundamentally from capital markets considered in standard corporate finance: First, start-ups are young, mostly unprofitable companies, with short operating histories and little capital. Young firms face exceptionally high degrees of uncertainty, constraining financing and creating difficult decisions about financial contracting. Second, capital markets for privately held companies are predominantly “deal markets” where terms and valuations are negotiated on a case-by-case basis, where investors can add value and are actively involved with the companies they finance. It is no surprise, then, that a specialized capital market for financing the entrepreneurial business has emerged: the venture capital market. Developed from a boutique and niche-status in the US from 1960 to the 1980’s, the past 20 years the growth of the global venture capital industry has been remarkable. The reason, obviously, is that many of the most prominent and influential technology companies – e.g., Apple, Intel, Google, and Microsoft – originally were backed by venture capitalists. But what do VCs really do? And how do they do it? How do they value a company? Do they add more than capital to the companies they invest in? If so, how? How do they raise their funds? This course will provide a comprehensive overview of the world of venture capital (VC). To a smaller extent we will also cover the world of private equity (PE), i.e., private investments in mature companies, since VC and PE taken together encompass the vast majority of active investment in privately held companies. The primary objective of the course is to provide an understanding of the concepts and institutions involved in entrepreneurial finance and private equity markets. |
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| Teaching methods | |||||||||||||||||||||||
| This course uses the case method that
places a strong emphasis on class participation. In effect, every
class will start with a broad question relevant to the
material/cases prepared by the students, and then we will get into
more detailed topics as the discussion unfolds. It is important to
understand that the process of arriving at a conclusion on the
topics that are covered is as important as getting to the
conclusion. Hence, it will be important for the students to explain
positions and arguments and to try to argue for the implementation
of their recommendations. While there are usually no absolutely
right answers to the issues raised in the cases, we will discuss,
there are good and bad arguments. This course will hopefully teach
the students to distinguish between the two.
Because of the nature of this course, it is important that the students attend every class, arrive on time and are ready to participate. Also, students should bring name cards to each class. |
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| Expected literature | |||||||||||||||||||||||
| Josh Lerner, Felda Hardymon and Ann
Leamon: Venture Capital & Private Equity, A Casebook (fifth
edition).
Various articles from economic/finance journals, including: Andrew Metrick and Ayako Yasuda, “The Economics of Private Equity Funds”, Review of Financial Studies 23, no. 6 (2010): 2303-41. Josh Lerner, Antoinette Schoar, and Wan Wongsunwai, “Smart Institutions, Foolish Choices: The Limited Partner Performance Puzzle”, Journal of Finance 62 (2007): 731-64. Bernard S. Black and Ronald J. Gilson, “Venture Capital and the Structure of Capital Markets: Banks versus Stock Markets”, Journal of Financial Economics47 (1998): 243-77 |
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Last updated on
20-03-2013