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Risk Management Module 3

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Robertas Kurakovas
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Entrepreneurial Finance

Entrepreneurial Finance
Risk Management
Risk
Entrepreneurial Finance

Outline

Chapter 1

Chapter 2

Private Equity

Venture Capital

Buyout capital

Summary of previous lectures

1. Why are new ventures hard to finance?

Missed deals: Apple

Missed Deals: Google

Missed deals: Amazon.com

Missed deals: Starbucks

New Ventures are hard to finance

New Ventures are hard to finance

New Ventures are hard to finance

The Market for lemons

The Market for lemons - example

What will happen in the most extreme version

The problem

The Problem - Solution

1. Screening and selecting deals

Target firms/industries for VCs

Venture Capital Investments by Industry

2. Financial Contracting Principal-Agent

2. Financial Contracting

3. Add Value to Portfolio companies

What impact will venture capital have on the

2. Sources of funding for entrepreneurial

Sources of funding for entrepreneurial firms

Most New Firms are not financed by Equity

VC Funding is Uncommon!

Fraction of all IPOs that are VC-backed

Receiving VC funding and going public are

How to Finance a New Venture

Alternative Sources of Capital

Venture Capital

Debt Financing vs. Equity Financing

Does the Identity of the (Equity) investor

3. Why is VC important?

Why is VC important? Historical Impact

4. Why the VC market has problems?

Venture Capital Fund commitments and invest..

Why the VC market has problems

Why has VC underperformed as an asset class?

The Early-stage VC dilemma

Is the VC model broken?

Or is the Limited Partner (LP) model broken ?

5. What can be done to fix it?

A case for government intervention to solve

Even better: government as a buyer!

6. The current and future state of the VC

The Billion Dollar StartUp Club

“Unicorns” (>$1 Billion) Real Success Stories

The Future: what will happen in the next

Summary of current lecture (Ch.3).