COURSE
NUMBER: MBA295B.1
This
course is cross-listed with the EWMBA Program
COURSE
TITLE: Venture Capital and Private Equity
UNITS
OF CREDIT: 3 Units
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: Wednesday, 6:00 – 9:30PM
PREREQUISITE(S):
It is strongly recommended that MBA295A Entrepreneurship be completed prior to
taking this course. If you haven't taken MBA295A, 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, and Placecast.
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.