Managing New Venture Funding

FIN345 - 1001
Autumn 2018

BEH 221, Tuesday evenings 7pm – 9:45pm, 28 Aug – 4 Dec 2018

Instructor – David J. Housey

Office Hours: Tuesdays ~5-7pm, BEH 537, or by appointment
Office Phone: (702) 895-3650 (Fin Dept main); (702) 852-6602 (off-campus office)
Email: david.housey@unlv.edu (best method of contact)

Managing New Venture Funding takes a holistic financial perspective from creation of
a startup that generally covers the entity’s life-cycle, i.e. the idea formation, business plan,
initial seed funding, early startup period and growth via acquisition or eventual exit. Some
of these areas are emphasized more than others, based on current market conditions
and real-world situations.

The course will focus on overall venture strategy with a finance emphasis and more
sophisticated decision making. Importantly, you should become more comfortable with
how to handle different environmental issues, i.e. distressed, growth and international,
which a startup and emerging-growth businesses face regularly.

Operating a business, especially in the early and growth stages, is never a static
experience. Things change and evolve all the time.

Upon completion of the course, you will be able to:

• Analyze real-world case studies from various universities, and effectively utilize the
case method
• Better understand the use of financial statements and cash flow analysis, and how
its importance relates to the ability to gain external funding and its impact on
acquisitions/exit strategy; there is a review of some accounting material, which is
inseparable from the finance material we cover as well
• Apply finance tools to an entrepreneurial situation, especially Microsoft Excel
• Understand the differences between and within long-term/intermediate/short-term
funding options (internal and external) and when it is appropriate to utilize them
• Understand consequences of decision-making regarding expansion in general
terms, via acquisition, or conversely, exit a venture via sale – we will utilize
simulations to achieve this objective
• Much better appreciate that in the real world, there is not necessarily one right
answer or solution to a problem or situation; ambiguity and uncertainty is an
accepted part of life in general, and especially in entrepreneurship…our course
deliberately departs from a structured course format to reflect this reality

Please note that FIN345 is a prerequisite for FIN480, a Finance elective offered in the
spring semester, and open to both Entrepreneurship and Finance Majors.

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Required Text and Materials:

No textbook will be used for this course. Instead we will use cases and select readings
from various sources; collectively the coursepack.

Harvard Business Publishing. You will have online access to a course site for these
materials. Additional articles et al will be provided from various other sources. Use this
link to go to the site to register – https://hbsp.harvard.edu/import/557489

Note: A laptop computer or tablet is necessary for the course simulations, which
will be conducted in class. It is recommended that you bring such a device to each
class session, and required for simulation days.

Grading Scheme and Course Components (total 500 points):

Class participation and contribution 20%

Case assignments/Discussion Questions 20%

Midterm Case 20%

Simulations: (1) Food Truck; (2) Equity Split; (3) Working
25%
Capital
Group subject-matter presentation 15%

• Coursework submitted after the deadline, where permissible, will garner half points
• Advise me via email if you are going to miss class. A no-call, no-show earns zero
points. With prior advice, half points can be awarded along with an opportunity to
make up the other half – at the instructor’s discretion.
• Coursework is to be submitted in hardcopy according to the style guide which
appears later in the syllabus.

Class participation and contribution:

As this course takes a holistic approach to financial management of a new venture and
growing business, class participation and contribution will play a significant role in the
calculation of the overall grade. As noted above, class participation, case assignments
and discussion questions will be 40% of your overall grade, as do the simulations and
presentation combined.

It is imperative that you arrive punctually to each class session ready to participate
proactively and productively. If you speak in class regarding course material, be sure to
support it; if you believe a decision should be made based on certain data and
assumptions, then state them clearly so everyone may understand your position.

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There may be more than one logical conclusion to a problem; it will depend on how well
you defend your point of view. Finance is not an exact science, and certainly not in
entrepreneurial situations. The idea is to provide a framework/toolbox for analysis and
decision making.
Special Guest Speakers:

In the spirit of the real-world element we want to promote in the course, we will have guest
lecturers join us during the semester. These individuals will offer us their personal and
professional insights gained from experience in a wide spectrum of industries.

Some of the guest-speaker backgrounds in prior semesters have included an Asian

woman who started an import/export firm specializing in trade between the US and China;
a retired CIA agent who worked in deep-cover operations worldwide; a fourth-generation
steel industry participant who established a Las Vegas-based global scrap steel
brokerage business and negotiates regularly with steel mills in various global locations; a
CEO of a Las-Vegas based community bank also experienced in corporate turnarounds;
a native Las Vegan and second-generation CEO of a insurance brokerage business; a
business broker and part-time race-car driver; international mobile telecoms and trade
ministry professionals based in Finland and Japan; an Israeli national and Las Vegas-
based entrepreneur who served in the Israeli Air Force; a Hispanic woman involved in
community-directed entrepreneurial ventures; an entrepreneurial leader in the health care
benefits and insurance industries and former Dallas Cowboys wide receiver; a former
University of North Carolina finance professor and current investment banker/private-
equity investor; and several people involved in the Las Vegas Downtown Project and
InNEVation Center. The guest speaker group also includes former FIN345 students and
UNLV Lee Business School alumni.

This aspect of the course is somewhat unique and quite interesting. We are grateful for
their taking time away from busy schedules to join us and share their experiences and
perspectives.

Case assignments and discussion questions:

As we will be utilizing cases for study and analysis you will be required to complete
questions from selected cases to submit at the end of class in which the cases are
discussed. These assignments will form 20% of your grade.

We are a collection of diverse individuals that make up a dynamic group in the course.
Therefore, you are highly encouraged to collaborate in study groups to arrive at the
solutions for non-exam cases, which you will submit individually. This is indeed how real-
world solutions are resolved.

Midterm:

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The midterm is an individual take-home assignment and all UNLV standards of academic
conduct will be in effect.

Simulations and Group Presentation:

There will be three simulations utilized in the course, two group exercises and another
individual, exam-type project. The group simulations will be done in groups of 3-4, first as
co-founders working to allocate equity in the nascent stage of a startup, prior to funding
or commencing substantial operations. The other simulation will involve group decision-
making regarding the launch of a food truck business in a hypothetical city. The individual
simulation places you in the role of a CEO of a small company in which you must make
choices between growth and cash-flow opportunities over ten years. For all three
simulations, you will complete the simulation and write a debrief paper.

At the end of the semester in lieu of a “final exam”, you will participate in a group project
which presents to the class a more in-depth subject which we have covered in the course.
Essentially you will be presenting to others about your findings on a more “deep dive” of
the particular subject (ie working-capital management).

More on the mechanics and details of these aspects will be discussed as we move
through the course. Any group activities in which you are assigned and unable to
participate without prior authorization from instructor is grounds for receiving a zero for
that project.

General Course Policies: No use of mobile phones during class. If you are unable to
attend class or must be late on arrival, it is important that you let the instructor know in
advance. If no advance notice is given, then a zero is recorded for an unexcused absence,
or a deduction from class participation points if an unexcused late arrival. You will also be
required to complete and sign the Finance Department Academic Integrity Policy, which
is standard for all LBS Finance courses.

Extracurricular/Extra Credit Opportunities:

There may be opportunities to engage in extracurricular events related to

entrepreneurship. These are highly recommended in addition to the in-class course
activities. Some of these activities during the semester may involve the ability to receive
extra credit as well. More information during the course as these events are announced.

Course and University Policies:

On the first day of class you will receive a name card. Please bring this name card to
each class session. Please display your name card during all classes, both for my benefit
(initially) and for guest speakers throughout the semester. After the first session, please
take the same seat for each session.

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Academic Misconduct – Academic integrity is a legitimate concern for every member of
the campus community; all share in upholding the fundamental values of honesty, trust,
respect, fairness, responsibility and professionalism. By choosing to join the UNLV
community, students accept the expectations of the Student Academic Misconduct Policy
and are encouraged when faced with choices to always take the ethical path. Students
enrolling in UNLV assume the obligation to conduct themselves in a manner compatible
with UNLV’s function as an educational institution. An example of academic misconduct
is plagiarism. Plagiarism is using the words or ideas of another, from the Internet or any
source, without proper citation of the sources. See the Student Academic Misconduct
Policy (approved December 9, 2005) located at:
https://www.unlv.edu/studentconduct/student-conduct.

Copyright – The University requires all members of the University Community to

familiarize themselves with and to follow copyright and fair use requirements. You are
individually and solely responsible for violations of copyright and fair use laws. The
university will neither protect nor defend you nor assume any responsibility for employee
or student violations of fair use laws. Violations of copyright laws could subject you to
federal and state civil penalties and criminal liability, as well as disciplinary action under
University policies. Additional information can be found at:
http://www.unlv.edu/provost/copyright.

Disability Resource Center (DRC) – The UNLV Disability Resource Center (SSC-A 143,
http://drc.unlv.edu/, 702-895-0866) provides resources for students with disabilities. If you
feel that you have a disability, please make an appointment with a Disabilities Specialist
at the DRC to discuss what options may be available to you. If you are registered with the
UNLV Disability Resource Center, bring your Academic Accommodation Plan from the
DRC to the instructor during office hours so that you may work together to develop
strategies for implementing the accommodations to meet both your needs and the
requirements of the course. Any information you provide is private and will be treated as
such. To maintain the confidentiality of your request, please do not approach the
instructor in front of others to discuss your accommodation needs.

Religious Holidays Policy – Any student missing class quizzes, examinations, or any
other class or lab work because of observance of religious holidays shall be given an
opportunity during that semester to make up missed work. The make-up will apply to the
religious holiday absence only. It shall be the responsibility of the student to notify the
instructor within the first 14 calendar days of the course for fall and spring courses
(excepting modular courses), or within the first 7 calendar days of the course for summer
and modular courses, of his or her intention to participate in religious holidays which do
not fall on state holidays or periods of class recess. For additional information, please
visit: http://catalog.unlv.edu/content.php?catoid=6&navoid=531.

Transparency in Learning and Teaching – The University encourages application of

the transparency method of constructing assignments for student success. Please see
these two links for further information:
https://www.unlv.edu/provost/teachingandlearning

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https://www.unlv.edu/provost/transparency

Incomplete Grades – The grade of I – Incomplete – can be granted when a student has
satisfactorily completed three-fourths of course work for that semester/session but for
reason(s) beyond the student’s control, and acceptable to the instructor, cannot complete
the last part of the course, and the instructor believes that the student can finish the
course without repeating it. The incomplete work must be made up before the end of the
following regular semester for undergraduate courses. Graduate students receiving “I”
grades in 500-, 600-, or 700-level courses have up to one calendar year to complete the
work, at the discretion of the instructor. If course requirements are not completed within
the time indicated, a grade of F will be recorded and the GPA will be adjusted accordingly.
Students who are fulfilling an Incomplete do not register for the course but make individual
arrangements with the instructor who assigned the I grade.

Tutoring and Coaching – The Academic Success Center (ASC) provides tutoring,
academic success coaching and other academic assistance for all UNLV undergraduate
students. For information regarding tutoring subjects, tutoring times, and other ASC
programs and services, visit http://www.unlv.edu/asc or call 702-895-3177. The ASC
building is located across from the Student Services Complex (SSC). Academic success
coaching is located on the second floor of the SSC (ASC Coaching Spot). Drop-in tutoring
is located on the second floor of the Lied Library and College of Engineering TEB second
floor.

UNLV Writing Center – One-on-one or small group assistance with writing is available
free of charge to UNLV students at the Writing Center, located in CDC-3-301. Although
walk-in consultations are sometimes available, students with appointments will receive
priority assistance. Appointments may be made in person or by calling 702-895-3908.
The student’s Rebel ID Card, a copy of the assignment (if possible), and two copies of
any writing to be reviewed are requested for the consultation. More information can be
found at: http://writingcenter.unlv.edu/.

Rebelmail – By policy, faculty and staff should e-mail students’ Rebelmail accounts only.
Rebelmail is UNLV’s official e-mail system for students. It is one of the primary ways
students receive official university communication such as information about deadlines,
major campus events, and announcements. All UNLV students receive a Rebelmail
account after they have been admitted to the university. Students’ e-mail prefixes are
listed on class rosters. The suffix is always @unlv.nevada.edu. Emailing within
WebCampus is acceptable.

Final Examinations – The University requires that final exams given at the end of a
course occur at the time and on the day specified in the final exam schedule. See the
schedule at: http://www.unlv.edu/registrar/calendars.

It is important for students to be familiar with this information.

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Course Schedule (subject to change):

Week 1 (28 Aug)

Course overview and introductions; Negotiation Note; and Food Truck Simulation

Week 2 (4 Sept)
Review and discussion on the Negotiation Note and the Food Truck Challenge

Week 3 (11 Sept)

Early Stage Business Vignettes and Assessing a Company’s Future Financial Health

Week 4 (18 Sept)

Smartix case; Legal/Tax Implications of Equity Splits; preview of Negotiating Equity Splits
at UpDown simulation

Week 5 (25 Sept)

Negotiating Equity Splits at UpDown simulation; Forms of organization discussion

Week 6 (2 Oct)
Statement of Cash Flows overview and related topics; UpDown debrief

Week 7 (9 Oct)
North Mountain Nursery Case; review statement of cash flows; discussion on midterm
assignment

Week 8 (16 Oct)

Take-Home Midterm Assignment due; formation of groups for remainder of semester

Week 9 (23 Oct)

Guest speaker; case study focused on this industry; TBA

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Week 10 (30 Oct)
Scale Effects, Network Effects and Investment Strategy, Shakedown case and Corruption
note

Week 11 (6 Nov)
Possible guest speaker and film, “Enron: Smartest Guys in the Room”

Week 12 (13 Nov)

Revisit cash flows with in-depth analysis of Netflix and Tesla

Week 13 (20 Nov)

Working Capital Management simulation review and debrief

Week 14 (27 Nov)

Dental Corp case; Group work re presentations

Week 15 (4 Dec)
Group subject-matter presentations and course wrap-up

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Style Guide

Assignments are to be submitted according to the following style guidelines:

Text Style Guide

Requirements
• Font: Arial
• Font size: 11
• Margins: 1”
• Justification: full (i.e. right and left)
• Line spacing: single
• After periods: two spaces
• Header (all pages):
- Date
- Your name
- Project name
• Footer (all pages):
- Page x of y
• Outside sources must be cited.

Other Notes:
• Prefer more than to over when referencing numbers/figures
• Prefer less than to under when referencing numbers/figures
• Use comprises or composed of, but not comprised of
• Numbers are to be spelled up from one to nine, with the use of digits beginning with the
number 10
• Use affect to mean influence; effect to mean result; and impact only to mean collide

Financial Style Guide

Font: Arial
Font size: 11

• In tables, use the currency symbol (e.g. $) only at the top and the bottom of the column,
not each instance.
• To indicate zero, use 0, rather than –
• Negative figures in red parentheses e.g. (100) for negative 100
• Decimal places only where material. For example no for $1,000,000.00; but yes for $1.25

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Related links and interesting resources:

www.myllc.com - myLLC.com
www.incorp.com – InCorp
www.docrun.com – DocRun
www.themill.vc
www.innevation.com
www.diversifynevada.com – Governor’s Office of Economic Development
www.billpayne.com - locally-based and internationally-recognized angel investor
www.angellist.com
www.startuplawyer.com
www.startupdigest.com
www.startupgrind.com
http://en.wikipedia.org/wiki/Private_equity -Wikipedia page for private equity
http://abovethecrowd.com/ - Blog by Benchmark Capital Partner Bill Gurley
http://www.startuprev.com/ Startup Revolution resources page, spearheaded by Brad
Feld of Foundry Group and Boulder, Colorado startup community
www.bloomberg.com
http://business.unlv.edu/entrepreneurship/ - Lee Business School Center for
Entrepreneurship

http://govcupnevada.com/ and http://www.dwrgovernorscup.org - Donald W. Reynolds

Governor’s Cup Collegiate Business Plan Competition
http://www.ati.utexas.edu/ - Austin Technology Incubator, University of Texas
http://www.nvca.org/ - National Venture Capital Association
www.sec.gov – US Securities and Exchange Commission

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