Dr. Marco Da Rin is an Associate Professor of Finance at Tilburg University. He holds a PhD in Economics from Stanford University. He has designed and taught courses in entrepreneurship and entrepreneurial finance at the undergraduate, Master, doctoral, MBA, and executive level in several countries. His research and teaching focuses on entrepreneurial finance, entrepreneurship, venture capital and private equity, and public policy for entrepreneurship. He has also been a consultant to several international organizations, including the European Commission, the OECD, and the United Nations, as well as regional governments and private companies. He has advised and contributed to several start-ups.

Dr. Thomas Hellmann is the DP World Professor of Entrepreneurship and Innovation at the Saïd School of Business, University of Oxford. He holds a PhD in Economics from Stanford University. His research and teaching interests cover entrepreneurial finance, entrepreneurship, innovation, strategic management, and public policy. He was previously on the faculty of the Stanford GSB and also taught at the Harvard Business School and Wharton. He is the founder of the NBER Entrepreneurship Research Boot Camp, the Academic Advisor of the Oxford Foundry, the Academic Director of SBS Entrepreneurship Centre, and Academic Lead of the Creative Destruction Lab - Oxford.

• Chapter 1: Introduction to Entrepreneurial Finance


• 1.1 What is entrepreneurial finance?


• 1.2 Why is entrepreneurial finance challenging?


• 1.3 Why is entrepreneurial finance important?


• 1.4 Key facts about entrepreneurial finance


• 1.5 The entrepreneurial financing process


• 1.5.1 The need for frameworks


• 1.5.2 The FIRE framework


• 1.5.3 FIRE in practice


• 1.6 Who are the investors?


• 1.6.1 Main types of investors


• 1.6.2 The FUEL framework


• Summary


• Review questions


• Chapter 2: Evaluating Venture Opportunities


• 2.1 Assessing Opportunities


• 2.1.1 The Venture Evaluation Matrix


• 2.1.2 The WorkHorse case study


• 2.2 Explaining the Venture Evaluation Matrix


• 2.2.1 Need


• 2.2.2 Solution


• 2.2.3 Team


• 2.2.4 Market


• 2.2.5 Competition


• 2.2.6 Network


• 2.2.7 Sales


• 2.2.8 Production


• 2.2.9 Organization


• 2.3 Drawing conclusions from the Venture Evaluation Matrix


• 2.3.1 Three perspectives on attractiveness


• 2.3.2 Three competitive advantages


• 2.3.3 Assessing risk


• 2.3.4 Interactions across cells


• 2.4 How entrepreneurs use the Venture Evaluation Matrix


• 2.4.1 The entrepreneur's decision


• 2.4.2 Writing a business plan


• 2.5 How investors use the Venture Evaluation Matrix


• 2.5.1 The Venture Evaluation Matrix spreadsheet tool


• 2.5.2 Investor due diligence


• 2.5.3 The investor's decision


• Summary


• Review questions


• Chapter 3: The Financial Plan


• 3.1 The purpose of the financial plan


• 3.2 Financial projections


• 3.2.1 The three reflections


• 3.2.2 The structure of financial projections


• 3.2.3 Sources of information


• 3.2.4 Developing financial projections


• 3.3 Defining a timeline with milestones


• 3.4 Estimating revenues


• 3.4.1 The top-down approach


• 3.4.2 The bottom-up approach


• 3.4.3 Combining approaches


• 3.5 Estimating costs


• 3.5.1 Terminology


• 3.5.2 Costs of goods sold


• 3.5.3 Operating expenses


• 3.5.4 Capital expenditures


• 3.6 Pro forma financial statements


• 3.6.1 The structure of financial statements


• 3.6.2 Interpreting financial projections


• 3.6.3 Income versus cash flows


• 3.6.4 Testing financial projections


• 3.6.5 Simplifications


• 3.7 Formulating the financial plan


• 3.7.1 The attractiveness of the venture


• 3.7.2 Financing needs


• 3.7.3 Pitching the financial plan


• Summary


• Review questions


• Chapter 4: Ownership and Returns


• 4.1 The mechanics of ownership and valuation


• 4.1.1 Pre-money and post-money valuation


• 4.1.2 Price and number of shares


• 4.1.3 Stock options


• 4.1.4 The capitalization table


• 4.1.5 Dilution with multiple rounds


• 4.2 Investor returns


• 4.2.1 Risk and return


• 4.2.2 Three measures of return


• 4.2.3 Comparing return measures


• 4.2.4 Returns with multiple rounds


• 4.3 The determinants of valuation and returns


• 4.3.1 The relationship between valuation and returns


• 4.3.2 The economic determinants of valuation


• 4.4 The determinants of founder ownership


• 4.4.1 Founder agreements


• 4.4.2 Principles for internal allocation


• 4.4.3 The FAST Tool


• Summary


• Review questions


• Chapter 5: Valuation Methods


• 5.1 The valuation of entrepreneurial companies


• 5.1.1 The purpose of performing a valuation


• 5.1.2 The challenges of performing a valuation


• 5.2 The Venture Capital method


• 5.2.1 Valuation with a single investment round


• 5.2.2 Valuation with multiple investment rounds


• 5.2.3 Estimating the inputs


• 5.2.4 Model variants


• 5.3 The Discounted Cash Flow method


• 5.3.1 The mechanics of the DCF method


• 5.3.2 Estimating the inputs


• 5.4 Methods of Comparables


• 5.4.1 The Investment Comparables method


• 5.4.2 The Exit Comparables method


• 5.5 Modelling uncertainty


• 5.5.1 Scenario analysis and simulations


• 5.5.2 PROFEX


• 5.6 The choice of valuation model


• Summary


• Review questions


• Chapter 6: Term Sheets


• 6.1 Term sheet fundamentals


• 6.1.1 The role of term sheets


• 6.1.2 Contingent contracting and milestones


• 6.1.3 Overview of terms


• 6.2 Cash flow rights


• 6.2.1 Convertible preferred stock


• 6.2.2 Participating preferred stock


• 6.2.3 Reasons for using preferred stock


• 6.3 Compensation


• 6.3.1 Founder employment agreements


• 6.3.2 Employee stock option plans


• 6.4 An overview of other terms


• 6.4.1 Control rights


• 6.4.2 Future fundraising


• 6.4.3 Investor liquidity


• 6.4.4 Additional clauses


• 6.5 Valuation versus terms


• 6.6 Convertible notes


• 6.6.1 How convertible notes work


• 6.6.2 Valuation caps


• Summary


• Review questions


• Chapter 7: Structuring Deals


• 7.1 The art of structuring deals


• 7.2 The fundraising process


• 7.2.1 Preparing the fundraising campaign


• 7.2.2 Executing the fundraising campaign


• 7.2.3 Valuing an idea


• 7.3 Finding a match


• 7.3.1 Investor deal sourcing


• 7.3.2 Investor screening


• 7.3.3 The MATCH tool


• 7.4 Syndication


• 7.4.1 Reasons to syndicate


• 7.4.2 The structure of syndicates


• 7.5 Deal Negotiations


• 7.5.1 Bargaining theory


• 7.5.2 Negotiation analysis


• 7.5.3 Closing the deal


• 7.5.4 Deal negotiations with investor competition


• 7.6 Living with the deal


• 7.6.1 The importance of trust


• 7.6.2 A long-term perspective


• Summary


• Review questions


• Chapter 8: Corporate Governance


• 8.1 The need for corporate governance


• 8.1.1 Why companies need investor involvement


• 8.1.2 Why investors oversee their companies


• 8.2 Corporate governance structures


• 8.2.1 Voting rights


• 8.2.2 Board of Directors


• 8.2.3 Informal control


• 8.3 Investor value-adding


• 8.3.1 Picking versus making winners


• 8.3.2 How investors add value


• 8.3.3 Where investors add value


• 8.3.4 The question of replacing managers


• 8.3.5 Assessing value-adding fit


• Summary


• Review questions


• Chapter 9: Staged Financing


• 9.1 The rationale for staged financing


• 9.2 Structuring staged financing deals


• 9.2.1 Staged investments and ownership


• 9.2.2 The option value of staging


• 9.2.3 Tranching


• 9.2.4 Old versus new investors


• 9.3 Term sheets for staging


• 9.3.1 The liquidation stack


• 9.3.2 Anti-dilution rights


• 9.3.3 Additional rights


• 9.4 Managing financial difficulties


• 9.4.1 Down rounds


• 9.4.2 Turnarounds


• 9.5 Dynamic strategies


• 9.5.1 Dynamic investment strategies


• 9.5.2 Dynamic valuation profiles


• Summary


• Review questions


• Chapter 10: Debt Financing


• 10.1 Fundamentals of debt


• 10.1.1 What is debt?


• 10.1.2 The structure of debt contracts


• 10.2 Debt versus equity


• 10.2.1 The fallacy that debt is cheaper than equity


• 10.2.2 Comparing debt and equity


• 10.3 Why banks don't lend to startups


• 10.4 Alternative types of debt


• 10.4.1 Personal loans and credit cards


• 10.4.2 Trade credit


• 10.4.3 Discounting and factoring


• 10.4.4 Venture leasing


• 10.4.5 Venture debt


• 10.5 Valuation with debt


• 10.5.1 Enterprise versus equity value


• 10.5.2 Adjusting valuation methods for debt


• Summary


• Review questions


• Chapter 11: Exit


• 11.1 The importance of exiting investments


• 11.1.1 Reasons for exit


• 11.1.2 The four main types of exit


• 11.1.3 The exit decision


• 11.1.4 The timing of exit


• 11.2 Initial Public Offerings


• 11.2.1 Benefits and costs


• 11.2.2 Preparing for an IPO


• 11.2.3 Pricing the IPO


• 11.2.4 Structuring the IPO


• 11.2.5 After the IPO


• 11.3 Acquisitions


• 11.3.1 Strategic motives


• 11.3.2 Preparing for an acquisition


• 11.3.3 Structuring an acquisition


• 11.3.4 After the acquisition


• 11.4 Sale to financial buyers


• 11.4.1 Buyouts


• 11.4.2 Secondary sales


• 11.5 Closing down the company


• 11.6 Determinants of the exit decision


• 11.6.1 Market forces


• 11.6.2 Economic...