Learn The Financial Skills Critical to Navigating Venture-Backed Companies
Introduction to the Course
Overview / Purpose of Course
This course is to help start-up companies learn critical information related to the venture capital industry, raising financing from venture investors, and modeling the growth of your company.
Who is this Course For?
The course’s primary goal is to develop financial skills in people currently working on the start-up side of the venture capital industry. The class tailors to all levels but will likely have the greatest impact on those actively involved in negotiations with potential investors and / or leading the growth of the company from a financial perspective.
Why Does this Course Exist?
To act as a neutral place for founders to learn information they need to know to thrive in the venture space. I am an educator, not an investor.
What is Required for the Course?
To participate in the course, you are required to attend all of the classes in a Batch (One two-hour class a week for four weeks). 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 Founder Course:
Summary of Materials Taught in This Course
Introduction to The Venture Ecosystem
The process of raising capital is complex and difficult. While the numbers are not truly known, it is estimated that between 1 – 5% of start-ups will successfully raise venture capital. Like many things, success in raising venture funding comes down to your ability to sell. Philosophically, you are selling an idea, a team, a product, and depending on stage, performance. Tactically, you are selling ownership in your company. For both types of sales, it is critical to understand who the players are, what they are after, and how to best position yourself to successfully sell to the right investors. If you do not know how to identify / sell to the right audience, it is an uphill battle.
In this module, we will walk through an overview of the venture capital industry. This will start with introducing the key entities in the space, their motivations, and how they seek to win. From there will talk about how a fund’s view of your company and the risks / rewards of investing change depending on stage (e.g., Seed / Series A / Series B). Finally, we will discuss areas where an investor’s focus and motivation will differ from your focus as a founder. It is critical to identify these differences so you can construct a relevant pitch while ensuring you are also focused on items critical to the business’s success, even if they are not directly relevant to the current fundraising process.
Understanding the Income Statement
Once you’ve raised the capital, now what? After the money has been raised, the expectation is that you perform. This includes things like creating and pricing your product, determining discount structures, and, most importantly, managing cash. Most companies that raise once will raise again. It is critical to understand how to position your firm for success not just at the first round but also in subsequent rounds. There is nothing worse than seeing a world-class idea / team fail because of financial mistakes.
In this module, we will walk through the key terms critical to understand when making decisions that will impact the income statement and cash flow of your company. This includes a discussion on pricing a product, determining discounts and, understanding how the valuation process for a company changes over time. Additionally, this module will spend time discussing the critical importance of cash flow for a business. This includes working capital cycles and liquidity.
Understanding The Cap Table:
When seeking venture capital, the goal is to sell partial ownership of your company to an investor in exchange for capital. For this sale to be successful, you need to ensure you raise enough money for your needs while minimizing the ownership you give up. Ownership is the most valuable thing you can offer someone, and so it is critical to ensure you do not give away any more than is necessary. In this module, we will walk through the mechanics of ownership in a company. The purpose of this module is to arm you with a base understanding of the concepts relevant to any negotiation on fundraising.
This will include a discussion on the key metrics of ownership (e.g., outstanding vs. fully diluted) and fundraising (e.g., pre-money / post-money). In addition to a mathematical and conceptual discussion, we will also discuss larger investor philosophies on valuation and how that philosophy changes over time (e.g., valuing based on different metrics depending on the company’s stage). Finally, we will also spend time discussing priced versus unpriced securities; specifically, convertible notes and SAFEs, which are increasingly replacing traditional priced seed rounds.
Additional Term Sheet Items and Waterfalls
The final module of this class will focus on additional terms that are negotiated into term sheets, including liquidation preference, participation rights, a cap on returns, and conversion rights. While these terms are not immediately relevant in the way ownership is, they become critical at the time of an IPO, acquisition, or bankruptcy. Understanding how these terms influence the value received at exit is critical. Knowing the significance of these terms will help you better negotiate your term sheets and / or identify term sheets worth pursuing.
The weeknight course will occur once a week on Monday from 6:00 pm to 8:00 pm (CST).
When a batch is run on a weekend, it will take place Saturday from 10:30 am – 12:00 pm (CST).
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.
A Batch will contain 5 – 10 students. Batches are constructed to ensure students in the course have a common level of understanding and will broaden other students’ networks.
The course’s primary focus is to develop skills within start-up companies. Students will be those currently working in / seeking to enter the start-up industry.
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.
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.
Founder of Pivot Education and Course Creator
Batch 1: April 4 to April 25 (Weeknight Batch)
Batch 2: May 2 to May 23 (Weeknight Batch)
Seminars / Guest Lectures / Speaking Engagements:
Harvard Business School: Bootcamp: February 28 to March 8
Private Batch (Venture Firm): February 22 to March 24
Techstars – Industries of the Future Founder Course: March 28 to March 31