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Modeling for Venture Capital

A Course Teaching Foundational Skills to Build Advanced Venture Models

Introduction to the Course

Overview / Purpose of Course
This course aims to provide an opportunity for live classes to hone your skills in modeling for venture capital. This is achieved through small group sessions, including lectures on key concepts (listed below), examples of modeling techniques and practical application of concepts, in-class discussions, homework problems, and case studies.

Who is this Course For?
The course’s primary goal is to develop financial skills in people currently working in venture after transitioning from a different industry. The typical student will be between Associate and Partner and have a background in a non-financial sector. There will typically be 1 – 2 analysts included in a Batch (selections are made on a case by case basis).

Why Does this Course Exist?
Many of the key moments in my life resulted from someone who took a chance on me and helped me without expecting anything in return. This class is a thank you letter to those people. Without someone going out of their way to help me, I would not be where I am now. The two skills I am strongest in are teaching and modeling, so I use those skills to help others.

What is Required for the Course?
To participate in the course, you are required to attend all of the classes in a Batch (two 1 1/2 hour classes per week) and are expected to attempt the provided homework and case studies (comprising between 2 – 5 hours of work per weekend). The homework is not due, but your ability to retain the material will be limited if you do not complete the associated problems. More detail on the tools required in the below sections.

How do I Apply?
If you feel comfortable with the above information and are confident in your ability to attend all of the class sessions in full, click the button below to apply.

Applying to the Course:

Concepts Taught in This Course

Below is a high-level overview of concepts covered.

Formatting Fundamentals
Best formatting practices for text, numbers, and larger model construction.

Income Statement
Developing a company’s Income Statement for use in a financial model.

Return Metrics
Understanding and leveraging the primary return metrics used in venture.

Free Cash Flow
Encompassing a holistic view of the impact cash has on a company’s projections and valuation.

Capitalization Tables
Developing a capitalization table and understanding its evolution over time.

Waterfalls
An introduction to and an in-class example of a waterfall for a company that is getting acquired.

Course Logistics

Class Times
The course will take place from 7:30 pm – 9:00 pm (CST) on Tuesdays and Thursdays. Classes will be conducted entirely through Zoom.

When the batch is run on a weekend, it will take place Saturday and Sunday from 10:30 am – 12:00 pm (CST).

Pre-Requisite Knowledge
This course is meant for all levels. Beyond a preliminary understanding of accounting and finance, there is not a specific pre-existing knowledge set that is required. To students concerned about their level of proficiency, feel free to reach out to me to discuss directly.

Batch Sizes
A Batch will contain 10 – 15 students. Batches are constructed to ensure students in the course have a common level of understanding and will broaden other students’ networks.

Student Profile
The course’s primary goal is to develop financial skills in people currently working in venture after transitioning from a different industry. The typical student will be between Associate and Partner and have a background in a non-financial sector. There will typically be 1 – 2 analysts included in a Batch (selections are made on a case by case basis).

Batch Selection
Once a student has applied to the course through the application link above, they will remain in the active applicant pool until an appropriate Batch is found. Once a potential fit has been identified, students will be invited for a 30-minute interview so the instructor can better understand their backgrounds, motivations, and goals for the course. Assuming students are a good fit, they will be added to the Batch.

Programs / Tools Needed
Windows’ operating system offers the broadest functionality when working in Microsoft Office, so it is suggested, but any operating system will work.

Homework and Case Studies
Students will be provided with homework assignments and case studies to reinforce their understanding of the material covered in each week’s sessions. Additionally, each week 2 – 3 case studies will be provided to offer an opportunity for a comprehensive review of the topics covered in that week’s classes. Questions will be modeled after the type of situation one might encounter on the job.

Standard Course Schedule

Week 1: Introduction to Returns and Capitalization Tables
Students will be introduced to the return metrics most commonly used in venture with associated discussions on when these metrics will be used. Additionally, students will learn the key terms / techniques used when developing a capitalization table. Topics covered will include building an employee option pool, layering in new securities, calculating pre- and post-money valuation, and completing option pool refreshes.

Week 2: Understanding and Developing an Income Statement
Information covered will include techniques for a bottoms-up revenue build (starting at the level of contract terms and bookings), with discussions on common revenue metrics used to drive a company’s valuation. Time will also be spent discussing the concepts surrounding a company’s expenses and the key lines of expense commonly shown on the Income Statement.

Week 3: Understanding a Company’s Cash Position
Information covered will expand the class’ understanding of the Income Statement’s limitations. Net Working Capital and Capital Expenditures will be taught with a focus on calculating Free Cash Flow. There will also be consideration given to the impact these items have on valuation.

Week 4: Developing Waterfalls
Information covered will walk the class through terms used to evaluate a waterfall (e.g., liquidation preference, participation rights, cap on returns, and conversion to common equity). Once the terms are defined, students will be walked through a waterfall using multiple equity tranches with different terms.

Zach Brauer
Course Creator and Instructor

Contact Me
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Course Schedule:
Batch 14: October 9th to October 31st (Weekend Batch)
Batch 15: November 16th to December 16th (Weeknight Batch)

Seminars / Guest Lectures / Speaking Engagements:
Bootcamp for AMEXCAP: October 12 to October 15
Intro to Venture Finance (Breaking Into Venture): October 28