COURSE NUMBER: EWMBA295B.1
This course is cross-listed with the FTMBA Program
COURSE TITLE: Venture Capital and Private Equity
UNITS OF CREDIT: 3.0
INSTRUCTORS: Terry Opdendyk & C. Sean Foote
E-MAIL ADDRESS: terry@onset.com , foote@haas.berkeley.edu,
CLASS WEB PAGE LOCATION: https://bspace.berkeley.edu/portal
MEETING DAY(S)/TIME: Wednesdays, 6:00PM – 9:30PM
PREREQUISITE(S): It is strongly recommended that EWMBA295A
Entrepreneurship be completed prior to taking this course. If you haven't taken
EWMBA295A, your background should include business plan development and
opportunity assessment in an early-stage growth company.
ABSTRACT OF COURSE'S
CONTENT AND OBJECTIVES:
Venture capital is core to our Silicon Valley high technology economy. U.C.
Berkeley is located in the ‘Mother Lode’ of this very special and unique
investment category. This course is an advanced offering for those
who intend to seek, or manage, venture capital funding. Accordingly it is
appropriate for students who aspire to become CEO’s of entrepreneurial
ventures, partners of venture capital firms or managers of institutional funds
that invest in venture capital. The course will also benefit those who will
work in major corporations in roles that intersect with the venture capital
community, such as M&A, Business Development and CFO. More generally,
venture capital, is a sub-category of private equity, and shares many common
characteristics. Students interested in categories of private equity other than
venture capital may find this course of interest for that reason; however the
course clearly focuses on venture capital.
The course will make extensive use of case studies and guest
lecturers. Industry experts, entrepreneurs, venture capitalists and
those who advise them, such as investment bankers and lawyers will be frequent
guests. We take extensive advantage of the school’s geographic proximity to
Silicon Valley to enrich the course with exposure industry leaders and emerging
innovators.
Over the past thirty-five years, there has been a tremendous boom
in venture capital, accompanied by significant volatility and erratic economic
returns. The industry has gone through periods of boom and bust, but is broadly
recognized as one of the essential pillars of a vibrant entrepreneurial
economy. The practices of US venture capital are being emulated around the
world. Yet the last several years has seen significant instability and
volatility in valuations and funds flows. Are such fluctuations unique, or
rather typical of these illiquid and imperfect high risk markets?
Recent experience indicates that the venture capital industry is in the process
of rapid evolution. Some challenge whether the investment results justify the
risk, while others, especially overseas, are aggressively working to build
local venture capital capabilities. Venture capital is essentially a cottage
industry with highly compensated craftsman struggling with many of the
structural issues of any maturing industry, including: specialization,
generational change, managing growth, geographic concentration and
globalization, among others. So while challenges remain, the industry seems destined
to play an import continuing role locally and globally. We will consider all
these strategic issues as well as the basic tools of the trade.
CLASS FORMAT: The course will be organized in four modules:
Module 1: Industry Overview, Fund Structure and Individual Career
The first module of "Venture Capital and Private Equity" examines how
private equity firms are organized and structured. The structure of private
equity funds, while often arcane and complex, has a profound effect on the
behavior of venture and buyout investors. Consequently, it is as important for
the entrepreneur raising private equity to understand these issues as it is for
a partner in a fund.
Module 2: Investing Toolkit: Investment Selection, Valuation and
Terms
The second module of the course will prepare you for what many perceive as the
core of the venture capital business: identifying opportunities and making
investments. We will consider the elements of what makes a good opportunity, as
well as what makes an opportunity a good investment for a specific fund. We
will master the key tools of assessment, valuation, structuring and terms. We
will investigate the interactions between private equity investors and the
entrepreneurs that they finance. These interactions are at the core of what
private equity investors do.
Module 3: Stages and Styles of Investing: Seed,
Corporate Venture, Impact Investing
The third module of "Venture Capital and Private Equity" examines
several of the many stages and styles of venture investing, and their
inter-relationship, from the initial seed investment, through the financing of
growth, and the involvement of corporate partners. Corporate venturing presents
special challenges to the corporation, its venture co-investors and the
entrepreneur. A special segment will investigate the world of impact investing
and probe for surprising overlaps in processes and structures.
Module 4: Money in and Money out: Fundraising, Liquidity and
Limited Partners
Our final module will investigate how one forms and fund raises
for a venture or private equity fund. We will look in depth at the needs and
perspectives of institutional limited partners and emerging trends such as the
role of new structures e.g. “funds-of-funds”. We will also
investigate the various avenues by which venture investors achieve liquidity so
they can provide returns to their investors. The recent re-emergence of the IPO
market both locally and globally will be explored.
REQUIRED READINGS:
- Venture Capital & Private Equity: A Casebook; Fourth edition, Lerner and Hardymon, Harvard Business
School, John Wiley& Sons, Inc.
- Term Sheets & Valuations,
Alex Wilmerding, Aspatore/Thomson 2006
- The text will be supplemented by other cases and readings, which
will be posted to the courses web site on study.net.
BASIS FOR FINAL GRADE:
INSTRUCTOR BIOS:
Terry Opdendyk
Terry Opdendyk has specialized in working with technology based
start-ups for more than 40 years. He founded ONSET Ventures, a premier Silicon
Valley venture capital firm, in 1984. He is Managing Director and General
Partner at ONSET.
Prior to launching the firm, Terry was president of VisiCorp,
guiding the software publishing company from inception into an industry leader.
Early in his career, Terry worked as a technical manager for Hewlett-Packard as
a part of the original group of individuals that started HP’s computer
business. He later headed Intel Corporation's microcomputer systems business,
microprocessor architecture activities, several international ventures and
human resources.
At ONSET Ventures, Terry maintains a broad spectrum of investment
interests including software, computing and communications infrastructure and
the leverage of big data. He serves on the boards of both public and private
companies, such as Adaptive Planning, Cloud
Cruiser, NetSeer, Sentilla, andPlacecast.
One of Terry’s passions is teaching. He works with students each
year focusing on the fundamentals of building successful businesses. He
currently is a Fellow at the Lester Center for Entrepreneurship and Innovation
at the Haas School of Business, University of California where he has taught
the Venture Capital and Private Equity class for the past ten years.
Terry received a B.S. from the Michigan State University Honors
College and a M.S. from Stanford University.
Sean Foote
Sean Foote has been a venture capitalist investing in early stage
companies for the past 15 years. His
firm. Labrador Ventures, has invested in more than 100
companies, including Hotmail, Pandora, and RocketFuel. He has
co-founded several entrepreneurial companies, and spends his non-profit time in
the fields of impact investing and education.
Before venture investing, Mr. Foote was a management consultant
with Boston Consulting Group, working in a wide range of industries such as
telecom, computers, healthcare, banking, and automotive on topics ranging from
strategic alliances to Internet strategies. Mr. Foote also worked as a systems
engineer for AT&T Bell Laboratories, developing artificial intelligence
systems for testing the most complicated telecommunications networks.
Mr. Foote is a lecturer at the University of California's Haas
School of Business where he teaches the top ranked venture capital and private
equity classes as well as Microfinance. He has also taught classes on
entrepreneurship at the University of Michigan's Business School, University of
Virginia's Darden School of Business and University of Pennsylvania's Wharton
School of Business He teaches a course in impact investing at
Stanford University, with a real time simulcast to 75 business school campuses
around the country.
Mr. Foote received his undergraduate degree in Electrical Engineering from the
University of Missouri Rolla (1988), and his MBA from the University of
Virginia's Darden Graduate School of Business (1993), where he received
the Shermett Award granted to the top 3% of students.