Venture Capital

Venture capital is the fuel that drives emerging companies and ambitious entrepreneurs worldwide. But for every successful, disruptive, trailblazing start-up, there are dozens of other businesses that fail, even after receiving multiple infusions of capital.

Venture Capital, a program from Wharton Executive Education, will lift the veil on one of the most exciting and perhaps least transparent areas in finance. Designed for investors and entrepreneurs alike, participants will come away with a greater understanding of how venture capital (VC) works; how the best venture capitalists source, screen, and value deals; and how to design contracts that protect both investors and founders.

Program Experience

Highlights and Key Outcomes

In Venture Capital, you will:

• Learn how VC funds are structured, how they operate, and why organizational structure matters to limited partners, general partners, and even founders
• Understand how to raise capital from limited partners, including the design of partnership agreements that enable effective relationships
• Develop a systematic way to screen, analyze, and value high-growth investment opportunities in nascent industries
• Discover effective ways to manage innovative processes
• Acquire a framework to negotiate, price, and structure the best investor terms
• Learn how to best navigate the shareholder’s agreement to avoid costly mistakes
• Identify how and when to exit the investment

Experience & Impact

Venture capitalists generally take a leap of faith on a business idea or founder when choosing to invest in a start-up. They have to value a company whose future financial success hinges on an unproven technology or product that hasn’t been fully commercialized or has yet to generate any revenue. And because of the longer time horizon to profitability and a greater degree of uncertainty of achieving success, venture capital has a risk-return profile that is significantly different from that of a conventional, established business with predictable revenues. As a result, the tools and valuation methods venture capitalists use to assess a business without any tangible assets is different too.

Venture Capital starts with a discussion on how VC funds are organized, how investments are selected, and how due diligence is conducted. Participants will examine case studies that detail a transaction from beginning to end. In this manner, participants will see how a deal is structured, learn more about the differing incentives of a VC fund and entrepreneurs, and gain a deeper understanding of venture investing. This program will provide participants a rigorous framework both to evaluate investment opportunities and to manage a multi-stage investment process in an innovative firm.

Session topics may include:

• Limited Partner/General Partner Negotiation and Contracting
• The VC Business Model: Sourcing, Screening, and Selection
• Venture Capital Valuation Method
• Term Sheets: The Venture Capitalist's and Entrepreneur's perspectives
• Deal Sourcing
• Managing Innovative Processes
• Later-Round Financing
• Preferred Stock Valuation
• Exit Strategies