Entrepreneurial Finance

Catalog description

This course is designed to outline how to evaluate, finance, and capitalize on new business opportunities. More generally, finance studies valuation and the allocation of resources under uncertainty. Indeed, fundamental topics in finance (e.g., valuing cash flows, assessing the cost of capital, choosing among suppliers of funds, and aligning incentives for value maximization) are as important for entrepreneurial firms as for more established firms. However, the capital market for financing entrepreneurial activities, and private equity investing more generally, differs fundamentally from capital markets considered in standard corporate finance. New and growing companies are more likely to have less information about their future prospects, making it fundamentally more challenging to value these companies. Investments in private companies are also often illiquid and under-diversified, thereby making decisions about financial contracting much more difficult. The primary objective of the course is to provide an understanding of the concepts and institutions involved in entrepreneurial finance and private equity markets. Since entrepreneurial finance and private equity investing are intrinsically linked, the course is purposefully designed to be broad and comprehensive. As an entrepreneur, you cannot negotiate effectively without understanding investors’ motivations. As an investor, you cannot evaluate a potential investment opportunity without appreciating entrepreneur’s perspective and incentives. Therefore, the course is designed for those who are interested in either pursuing entrepreneurial activity or financing entrepreneurial ventures. prereq FIN 311. Offered in the spring semesters.