15.391 | Fall 2010 | Graduate
Early Stage Capital

Readings

LEC # TOPICS READINGS
1 Introductory class: logistics

Prior to class, read the following:

Course syllabus

All three exercise/assignment documents

2 Term sheets 101

Fenwick and West LLP. “Venture Capital Survey Silicon Valley Second Quarter 2010.”

———. “Explanation of Certain Terms Used In Venture Financing Terms Survey.”

Feld, Brad. “Revisiting the Term Sheet.” FeldThoughts blog, June 3rd, 2008. Brad Feld’s classic term sheet blog series (somewhat dated but a great practitioner’s intro)

3

Meet the lawyer

Guest: David Capillo, Partner, Goodwin Procter

Garland, Russ, ed. “Venture Capital Deal Terms Report.” Fifth edition. Jersey City, NJ: Dow Jones & Company, Inc., 2007. Particularly, read the following sections: deal terms; company valuation; company control; securities (convertible, participating preferred); dilution protection; founder vesting; and stock option pool.

Capillo, David. “Avoid the Eight Great Mistakes that Entrepreneurs Make.” Mass High Tech, March 31, 2010.

“Term Sheet.” Model Legal Documents. National Venture Capital Association, February 2010.

4

The entrepreneur’s view of venture capital (VC)

Guest: Bennett Fisher, Founder and CEO, Retroficiency, Inc.

Retroficiency (Acquired by ENGIE Insight). Review website to understand their business model and product offering. The short blog will give you a strong overview quickly.

Lee, Paul H. “Strategic vs. Traditional Investors: the Lowdown from a Venture Capital Vet.” Fast Company, October 8, 2009.

5

Search funds: introduction to a different kind of early stage capital

Guest: David Brown, Partner, Choate Hall & Stewart

Search Funds. Center for Entrepreneurial Studies, Stanford Graduate School of Business.

Harrington, Sean, and H. Irving Grousbeck. “Search Funds—2007: Observations.” Stanford Graduate School of Business Case E-282, January 15, 2008. (PDF)

Rozenrot, Elnor, and Fred Wainwright. “Note on Search Funds.” Tuck School of Business at Dartmouth Case #5-0034, October 18, 2005. (PDF)

6 Compare and contrast lawyer rounds No readings
7

VC from the inside: the partnership

Guest: Carmichael Roberts, General Partner, Northbridge Venture Partners

Northbridge. Review website, focusing on the firm’s investment philosophy and current portfolio.

Lassiter, Joseph, Michael Roberts, and Kim Slack. “Surface Logix.” Harvard Business School Case 9-802050, August 22, 2001.

8 Angels, super angels, micro VC: trends in seed stage investing

Geshwiler, James. “Adventures in Startups & VC.” Online blog, Common Angels. Review company website and blog.

Beisel, David. “Genuine VC.” Review blog, particularly the entries on the launch of NextView Ventures and on “Micro VC.”

Guynn, Jessica. “’AngelGate’ Disrupts TechCrunch Conference but No ‘Jerry Springer’ Moment.” Los Angeles Times, September 27, 2010. Skim the West Coast conflict among Super Angels in Silicon Valley, with many relevant links in this article.

Lohr, Steve. “The Rise of the Fleet-Footed Start-Up.” The New York Times, April 24, 2010. Read this less silly overview of changes in seed stage investments and the lean startup model.

9

The “A Round” and beyond: living with a VC

Guest: Jeff Bussgang, General Partner, Flybridge Capital Partners

Flybridge Capital Partners. Review website for Jeff Bussgang’s background and the philosophy of the firm.

Bussgang, Jeff. “Seeing Both Sides: VC Perspectives from a Former Entrepreneur.” Online blog.

Bussgang, Jeffrey. “Inside the VC Club: the 1,000 Deciders.” Chapter 2 in Mastering the VC Game. New York, NY: Penguin Group, 2010. ISBN: 9781591843252.

10

Emerging market VC: it’s what’s next

Guest: Simon Olson, FIR Capital

Skim the Following Resources for Background on Current Emerging Market VC Activity

“India Venture Capital Report 2009.” Global India Venture Capital Association, 2009.

Latin America Venture Capital Association.

Draper Fisher Jurvetson. A unique network of early stage investment affiliates around the globe; some are classic emerging markets and others are just big developed markets.

IDG Ventures. This is the network of emerging market funds backed by Pat McGovern, the same person who was the sole LP for Jeff Bussgang and Flybridge’s first fund. There is a heavy concentration of Sloan alumni working in these funds.

Review the Following Resources on Brazilian VC Markets in Preparation for a Discussion with Simon Olson, A Partner at FIR Capital in Brazil

Simon Olson. Draper Fisher Jurvetson.

Venture Capital Thoughts and Reflections.

FIR Capital. Please note there are both English and Portuguese versions of the website.

11

Raising money for non-tech ventures

Guest: Chris Gabrieli, Venture Partner, Bessemer Ventures; Chair, Mass 2020

Bessemer Venture Partners. Review for Chris Gabrieli’s background in venture investing; please also review the “anti-portfolio” page under portfolio investments.

Mass 2020. Review for background on Chris’s non-finance activities.

12 Conclusions: comparisons and contrasts of VC rounds No readings

Course Info
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Fall 2010
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assignment Written Assignments