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In this information resolve entrepreneurial management yan gao.
Entrepreneurial Management (02819020)
Instructor: Yan Gao, Program: MBA
Semester: Spring 2014
Time: Fridays 19:00-21:50, Week 1-12
Credit Hour: 30 in-class hours Credits: 2
Prerequisite: None Location: Classroom 216, GSM Old Building
Contact Information:
Office Hours:
1. PROGRAM LEARNING GOALS AND OBJECTIVES
Learning Goal 1: Graduates will have a sense of social responsibility.
Objective 1.1: Graduates will understand the importance of corporate social
responsibility.
Objective 1.2: Graduates will identify potential ethical issues in their professional
lives.
Learning Goal 2: Graduates will be effective business managers who will be able to
use analytical tools to make business and managerial decisions.
Objective 2.1: Graduates will have a solid understanding of business fundamentals
and will be familiar with advanced business concepts.
Objective 2.2: Graduates will be familiar with state-of-the-art quantitative analytical
techniques and will apply the techniques in an appropriate way.
Objective 2.3: Graduates will be able to solve problems and make strategic decisions
Learning goal 3: Our graduates will be effective business managers and leaders with
strong communication skills.
Objective 3.1: Our students will be proficient in written and oral communication.
Objective 3.2: Our students will display interpersonal sensitivity in their dealings
with others
Objective 3.3: Our graduates will be able to motivate others and act as leaders
among their peers.
Learning goal 4: Graduates will have a broad vision of globalization.
Objective 4.1: Graduates will be aware of cross-cultural differences.
Objective 4.2: Graduates will understand the political, economic and societal
characteristics of the major global business powers.
2. PURPOSE
Entrepreneurial Management provides a complete overview of the processes, challenges,
and problems associated with founding and financing a new, unquoted company. The
course is intended to give MBA students a better understanding of starting and building
new firms, the various ways an unquoted company can be financed, and how to manage
international and technology-based ventures. By the end of the course, students should be
able to make a sense of the main strategy and financing issues, which must be addressed
when starting or buying a business. Although this course stands alone, it may be
complemented by corporate finance and strategy courses.
3. DESIGN
The course is composed of ten three-hours sessions. It will be centered around case
discussions on the main topics of Entrepreneurial Management: entrepreneurial
opportunity assessment, building a business model and strategy, financing new firms,
venture capital, managing entrepreneurial growth, starting high-technology ventures,
managing international start-ups, and entrepreneurial harvesting and exit. The last session
will be on entrepreneurial issues in the People’s Republic of China. Most case studies are
contemporary cases developed and used for teaching purposes by London Business
School and Harvard Business School.
There is no a book that can teach one all about starting, financing, and managing new
companies because (a) the subject can involve so many variations on any theme, and (b)
there are often no definite answers to the main issues. The best way to deal with such
ambiguity is to become involved in lots of deals, learning from each and building up
one’s experience in approaching the issues involved. It is important therefore that you
read all the reading materials and prepare all cases and participate in the discussion of
each case. This is not a course where you can learn by simply skimming the case before
class and then picking up a few useful points from the class discussion. You will only
learn from struggling with the valuation and financing issues beforehand, reaching your
own initial conclusions, and then building on that experience in the class discussion.
4. PREREQUISITE
The instructional language for the course is English. Students should be proficient in
reading, writing and speaking in English. Students also are expected to have taken
courses or have read a sufficient number of business case studies in English. Basic
knowledge of accounting and corporate finance will be helpful.
5. ASSESSMENT
This will comprise two elements:
A. Class participation and attendance 50%
B. Final paper 50%
A. Class Participation
Because class participation and attendance accounts for 50 percent, it is vital that
everyone prepares properly for each session and participates actively in class discussion.
In doing so, please bear in mind that the quality of your contribution is more important
than quantity. Make your contributions incisive, concise and constructive. Please do not
opt out of discussion once you have made a couple of remarks. If you experience
difficulty in this area you should feel free to discuss it with me.
B. Final Paper
Final paper may be of two different styles: It may be either a case study of an
entrepreneurial firm or venture capital company in China, or analytical and empirical
paper focusing on an entrepreneurial theme in the Chinese context. Whatever the style,
the focus of the paper should be a company or industry in the People’s Republic of China.
The followings are exemplary topics for final paper that students may consider:
• Venture capital in China
• Internet entrepreneurship and startups in China
• High technology new firms in China, e.g., nanotechnology ventures.
• Low technology new firms in China
• High tech industrial districts in China (e.g, Zhongguancun in Beijing)
• The role of social networks, i.e., guanxi, in entrepreneurship in China
• Women versus men entrepreneurs in China
• Family firms in China
• Franchising in China
• New law firms in China
• Commercialization of university R&D in China, e.g., Beida, Tsinghua Universities, or
Chinese Academy of Sciences.
• Religion, Religious beliefs, and entrepreneurship in China
• Chinese culture and entrepreneurship
• Human capital and entrepreneurship in China
• Institutions and entrepreneurship in China
• Overseas Chinese entrepreneurship in China
• Overseas (non-Chinese) entrepreneurs in China
• If you choose other themes for your final paper, please consult with me in advance to
ascertain whether your topic is entrepreneurship-related.
In terms of format, the final paper should be written in English, 22-25 pages, double-
spaced, New Times Roman 12 font. The paper should have an abstract that describes the
main content of the paper, and the abstract should not be longer than 100 words. Tables,
figures, and other pictorial elements can be included. The paper should bear the author’s
full names, student ID number, and functional email address. Please handover your
papers to the teaching assistant on the day of the tenth (final) session. I will distribute a
material that contains detailed instructions and advice on how to write a good final paper
in the third session.
6. ADMINISTRATION
Ms Xin Lingmei of the MBA office is responsible for the overall management of this
course. A teaching assistant will handle all the administrative work. He will deal with all
technical aspects of the course such as photocopying and distribution of reading materials
and case studies. I am happy to see students on Wednesdays at 4.00-5.00 p.m. in my
office – Room 338, New Guanghua Building. If for any reason you are unable to attend a
class, you should notify TA in advance. Weichen Chen, MA student at Guanghua, is the
TA. His mobile phone is 15811101333, and email is [email protected]
7. COURSE CONTENT AND SCHEDULE
Session
Date Topic
Session One Feb 21 Entrepreneurial opportunities
Session Two Feb 28 Building a Business Model and Strategy
Session Three
Mar 7
Financing New Firms: Financial Instruments, Terms and
Structure
Venture Capital as Business
Session Four Mar 14 Financing New Firms: Evaluation and Valuation Issues
Session Five Mar 21 Financing New Firms: Deal Structure
Mar 28 All courses Cancelled due to Industrial Course Week
Session Six April 4 Managing Entrepreneurial Growth
Session Seven April 11 Starting and Managing High Technology Ventures
Session Eight April 18 Managing Multinational Startups
Session Nine April 25 Entrepreneurial Harvesting and Exit
May 2 Labor’s Day-No Class
Session Ten
May 9
Entrepreneurship and venture capital in the People’s
Republic of China
8. READING MATERIALS
Your folder contains all the cases for the course, plus those readings that require attention
prior to each class. Other additional readings will be handed out nearer the session as
appropriate. Lecture notes will be distributed at the beginning of each session.
9. OTHER ISSUES
• Please bring to each session your name stands. Your name should be written in large,
Latin, and bold fonts so that they are visible from different corners of the room. For
example, JESSICA HONGMEI WANG
• Please keep in mind that all the discussions and conversations with your classmates
and the instructor are a part of your professional communications rather than personal
or private socializations. It is, therefore, desirable that you do not ask any private,
personal questions, or make sexist, ageist, and other inappropriate comments and
remarks in the class. Please also avoid to debate politically sensitive issues such as
Taiwan, Tibet independence, Far Lung Gong movement, the leadership and role of
the Communist Party of China, and human rights issues in China.
• I acknowledge and appreciate each student’s learning habits and skills. However, I
would like to advise you not to memorize what your read from course materials but
rather to think creatively and critically when you analyze cases and read teaching
materials. I discourage excessive memorizing.
• In each session, the class will be divided into several groups to discuss cases. I will
fix everyone to a group with different people in each session. This is to make sure
that you discuss issues with different people in various sessions. One thing you
should avoid is to stick to your friends or those whom you know.
• Finally, I would like to ask you not to make unauthorized copies of cases, readings,
and lecture notes, and distribute to persons who are not registered for this course. I
appreciate your cooperation on this matter in advance.
10. THE INSTRUCTOR
Yan?Rock?Gao is clinical professor and associate director at Center for Innovation
and Entrepreneurship at Peking University’s Guanghua School of Management,
Professor Gao earned his PhD degree in Finance from Northwestern University Kellogg
School of Management. Previously, Professor Gao had held faculty, visiting, and lecturer
and positions at China Europe International Business School (CEIBS), California State
University, Baruch College (City University of New York), and Northwestern University.
He worked as financial analyst in Merrill Lynch Co. and Cathay Financial LLC in New
York. His current industry affiliations include founder and CEO of MakeSense Inc.,
Partner at TSFF (a VC fund of fund), and Senior Advisor at New Horizon Capital.
Professor Gao can be contacted at: [email protected]
GOOD LUCK!
SESSION ONE: ENTREPRENEURIAL OPPORTUNITIES
Opportunity is the well-spring of entrepreneurship. All new ventures start from and are
anchored in opportunity. Developing, writing and presenting a business plan upon a
perceived opportunity is the centerpiece of business start-up process. In this first session
we focus therefore on the nature of opportunity and core characteristics of good business
plans. We need to establish at the outset a clear understanding of the difference between
an idea and an opportunity; the tests that you might apply to any opportunity; and the way
in which investors evaluate potential opportunities. In assessing opportunities many of
the analytical tools and insights acquired in your core strategy and marketing courses
need to be brought to bear. Building on this we sharpen the focus to address the
distinctive features of an entrepreneurial opportunity and the questions that you should
ask of it.
Reading:
The Opportunity: Creating, Shaping, Recognising, Seizing. Chapter 3, New Venture
Creation: Entrepreneurship for the 21
st
Century, J . Timmons, Irwin McGraw-Hill, 1999
No case discussions in this opening session.
SESSION TWO: BUILDING A BUSINESS MODEL AND STRATEGY
Once entrepreneurial opportunities have been recognized, and business plan has been
written, entrepreneurs have to formulate and implement suitable strategies and tactics to
create value. In doing so, entrepreneurs have to assess their resources, capabilities, and
competitive and market environments, and come up with viable business model and
strategies that are sustainable. This session is devoted to these and other relevant issues.
Readings:
Applegate, Austin, and McFarlan, 2003, Crafting business models.
Thompson and Strickland, 1998. A Guide to case analysis.
Case: Quicken Insurance: The Race to Click and Close
Case preparation: Please read first reading materials including “Guide to Case Analysis”
Once you, read the material, move on to the case. When you read the case, ask your-self:
What are the traditional strategies and tactics that managers and entrepreneurs adopt in
established industries and firms? What is Quicken Insurance’s business model? Is there
any strategy here? If there is, what is it? What are the main elements or components of
this strategy? How competitive this strategy is? Is this strategy sustainable, and so on?
Try to think of important strategy related questions and issues, and provide answers to
them.
SESSION THREE: FINANCING NEW FIRMS: INSTRUMENTS, TERMS AND
STRUCTURE? VENTURE CAPITAL BUSINESS
The financing deal that the entrepreneur strikes at the outset is the deal that he or she will
live with for many years. Getting it right is therefore essential. But getting it right entails
reconciling a number of different interests: those of the entrepreneur, the private investor
ad the banker. The interests, aspirations and expectations of these parties to a deal are not
necessarily the same. In meeting these different interests, a range of financial instruments,
investment terms and deal structures have been developed. This session will present an
overview of this central topic.
Readings:
Finance for entrepreneurial companies: Financing instruments, 1994, London Business
School.
Introduction to Capital Sources for Entrepreneurial Ventures, Darden School, University
of Virginia.
The Structure and Governance of Venture Capital Organisations, W. Sahlman, 1990,
J ournal of Financial Economics.
Case: Advanced Business Computers
Case Preparation: Please read the notes on financing instruments as background. Then
read the ABC case and put yourself in, respectively, the positions of the banker, the
outside investor and the entrepreneur. From the perspective of each of these prospective
parties to the venture, how do you assess its financing needs, what instruments suit whose
interests, what concerns would be uppermost in your mind, and what deal structure would
you find acceptable? Be prepared to show and defend your deal structure and its impact
on the company’s financial position.
SESSION FOUR: FINANCING NEW FIRMS: EVALUATION AND
VALUATION
In any financial transaction involving an unquoted (private) company, the most critical
factor usually is determining the value of the company. It is also one of the most difficult
things to do – valuing a privately-held company. There are many different techniques for
valuing such companies, yet it is also as much as an art as science. Rarely does any one
method produce the correct answer. First part of this session is devoted to discussions of
alternative ways of valuing companies and assessing the strengths and weaknesses of
each approach in the context of examples in the cases. Not every start-up can be drip-fed
with capital. Biotech companies, property ventures and numerous others require very
large investment on day one, putting even more pressure on the financier to come up with
a creative financing structure to enable the deal to work for all parties involved. Second
part of the session addresses one such opportunity.
Readings:
How Venture Capitalists Evaluate Potential Venture Opportunities, Harvard Business
School, 2004
Twenty Questions You’ll Be Asked By VCs…if you get that far
Valuing Privately-Owned Companies: Valuation Techniques, London Business School,
1993.
A Method for Valuing High-risk, Long-term investments, The “Venture Capital Method”,
Harvard Business School, 2009
Cases: Geotech; ISIS scientific software; Procare; Northsea offshore oil services;
Deep Sea World.
Case Preparation: Please start with reading materials. Read each carefully and struggle
with all the main financial concepts and instruments. You may have to recall what you
learned in introductory courses of accounting and corporate finance. Because this session
is quantitative, students usually find helpful small group discussions prior class. Those
students who did not take accounting or corporate finance before are strongly advised to
discuss these issues informally. In preparing each case, please be sure to do the numbers
and fully prepared to discuss and justify your valuation and valuation method(s) for each
company. When consider Deep Sea World (A) take the role of Norman Yarrow and make
your own assessments of the risks involved in this business idea and decide how to price,
structure and stage the financing.
SESSION FIVE: FINANCING NEW FIRMS: DEAL STRUCTURE
Some of you may end up working in a venture capital firm; others may be calling on VCs
to raise money; yet others may be on the receiving end of the venture capitalists’ pitches
to invest in their funds. A variety of issues are important to understanding how these
funds operate, what motivates the people managing them and how they choose
entrepreneurs to support. This session is devoted to these issues.
Readings:
The Structure and Governance of Venture Capital Organisations, W. Sahlman, 1990,
J ournal of Financial Economics.
The Deal: Valuation, Structure and Negotiation, J Timmons, New Venture Creation:
Entrepreneurship for 21
st
Century, Chapter 14.
Cases: Walnut Associates (A)(B)(C)(D)
Case Questions to Discuss: Walnut (A) (B)
1. As a Walnut investor, what critical issues do you see as requiring more investigation/due
diligence on your part before investing, and how would you accomplish that? What level
of comfort/certainty would you need to have prior to investing?
2. As Bob O’Connor, what issues/concerns do you have relative to Walnut’s investing in
your business?
Case Questions to Discuss ?Walnut (D):
Look at the term sheet from O’Connor’s perspective….
1. What do you think the investors are trying to accomplish?
2. What is a reasonable valuation for RBS in J une 1998? What is the value implied by the
term sheet?
3. What proposed terms do you find most puzzling and why? What would you try to
negotiate, and what you might want to give up to get what you want?
SESSION SIX: MANAGING ENTREPRENEURIAL GROWTH
In the previous sessions, we examined various financial instruments that entrepreneurs
and venture capitalists may use in their financing new firms, and the different methods of
how private firms can be valued. In this session, we explore the issues and challenges of
managing growing firms, and how entrepreneurs can sustain their firms’ growth by
capitalizing on new opportunities. The case is a J apanese firm.
Readings:
Managing Entrepreneurial Growth, Kuratko & Hodgetts, 2004.
Case: Building a Consumer Finance Company in Japan; Jinwoong: Financing an
Entrepreneurial Firm in the Wake of the Korean Financial Crisis (1997)
Case Preparation: This time, I strongly suggest that you read first the case quickly, and
try to think of the main issues and problems facing this firm. After that, please read the
listed material. Once you have done this, please read carefully the case. Try to
conceptualize the growth issues and alternatives, assess each concrete option, and
examine risks and returns of each possible move. In general, think of crucial problems
and issues in this company, and put your-selves in their positions. What strategy, tactics,
and implementation actions you will take in order to take this firm to the next growth
level?
SESSION SEVEN: STARTING AND MANAGING HIGH TECHNOLOGY
VENTURES
Building a global presence in an emerging sector is a fundamental challenge for many
entreprepeneurial companies, particularly technology based firms. Bridging the gap
between technology and market implies bringing together technical expertise and
marketing experience into the founding management team early. Moreover, fast growing
high tech companies usually find that their need for capital grows exponentially with the
growth of the business. In this session we shall explore these issues in detail.
Readings:
The Technological Base of the New Enterprise, Roberts, Entrepreneurs in High
Technology, Chapter 4.
The Art of High Technology Management, Maidique & Hayes.
Case: Trilogy software; Xeikon, S. A.
Case Preparation: In this session we would like to pursue a different learning strategy
from that we followed in all previous sessions. I will not present possible questions for
you here but rather I suggest you read all the case and readings yourself, and think of any
interesting questions that can be discussed in the class.
SESSION EIGHT: MANAGING MULTINATIONAL START-UPS
While globalisation forces are shaping up our lives ever faster and deeper, entrepreneurs
often are the lead players of the new economic game. More and more entrepreneurial
firms expand into international markets at early stage of their growth and many are born-
global firms. This broad phenomenon is labeled as internationalisation of start-ups, and in
this session we will consider financial and management issues of multinational,
entrepreneurial start-ups.
Readings:
Global Start-ups: Entrepreneurs on a worldwide stage, 1995. Oviatt & McDougal.
Global opportunities foe entrepreneurs, 2004, Kuratko & Hodgetts.
Cases: Spotfire; Data Clear: Go Global or Not?
Case Preparation: I hope by now you have learned necessary skills to analyze
entrepreneurial business case studies. Therefore I will not guide you on what and how to
read. Spotfire describes a recently started software company specializing in data analysis
and visualisation. The company has offices and staff in Sweden and the United States.
Going forward, Spotfire’s management faces a number of important challenges. As you
read Spotfire, you may consider the following questions: what is the nature of the
opportunity for the firm? What strategy should the firm pursue over the next 3-5 years?
Spotfire expects to raise additional capital in the first half of 1999. How much capital is
needed? What is the valuation of the company? Under what terms should Spotfire seek to
raise capital? The firm’s development group and the rest of the company work in
geographically separate locations. Is this strategy sustainable? Why/Why not? How
should the firm finance its growth in the future? I leave Data Clear for you to analyze
without guiding questions. Identify the main financial, operational and cultural context
issues in these cases and propose to your classmates to discuss. When you think of
possible questions and issues, please bear in mind that this session is devoted to all the
issues involved in international startups.
SESSION NINE: ENTREPRENEURIAL HARVESTING AND EXIT
The ultimate goal of many entrepreneurs is building a successful business and enjoying
fruits of several years of sleepless nights and hard work. This is the stage when an
entrepreneur has to close a chapter in his adventure. The action is called “Realising
Entrepreneurial Value”. The market for unquoted companies is by its nature highly
illiquid. This can pose financial difficulties for entrepreneurs whose wealth is often
largely tied up in their company. This situation becomes more complex when there are
multiple shareholders with different needs and expectations. Since an investment in a
privately-held company is illiquid, experienced investors and prudent entrepreneurs must
always be sensitive to issues which might affect their ability to realise maximum value
from their investment. This includes (1) sensing when the time is right to seek to harvest
and (2) determining the best way to go about it. This session deals with the options
available to entrepreneurs and factors that can impinge on the harvesting decision and
processes for achieving a harvest.
Readings:
The Harvest and Beyond, Timmons, Chapter 18
Case: RightNow Technologies
Case Preparation: TBD
SESSION TEN: ENTREPRENEURSHIP AND VENTURE CAPITAL IN THE
PEOPLE’S REPUBLIC OF CHINA
In this concluding session, we will discuss the main problems and issues of starting and
managing new firms in the context of the People’s Republic of China – the mainland
China. We will cover both entrepreneurial environment in general, with special emphasis
on China venture capital industry. Various Chinese specific issues will be discussed, in
comparison with world standard practice, such as local government’s role in promoting
entrepreneurship, tax issues, special organizational VC structures, the trend of VC
industry, developments and obstacles in financial institution and capital market. Finally
we discuss the implications of China’s renewed reform on the issues we covered.
Readings:
Financing new ventures in China: System antecedents, and institutionalization, White,
Gao, & Zhang, 2005, Research Policy.
The Seven Disciplines for Venturing in China, MIT Sloan Management Review, 2006
Others may be distributed in class.
THANK YOU AND GOOD BYE!
doc_949568012.pdf
In this information resolve entrepreneurial management yan gao.
Entrepreneurial Management (02819020)
Instructor: Yan Gao, Program: MBA
Semester: Spring 2014
Time: Fridays 19:00-21:50, Week 1-12
Credit Hour: 30 in-class hours Credits: 2
Prerequisite: None Location: Classroom 216, GSM Old Building
Contact Information:
Office Hours:
1. PROGRAM LEARNING GOALS AND OBJECTIVES
Learning Goal 1: Graduates will have a sense of social responsibility.
Objective 1.1: Graduates will understand the importance of corporate social
responsibility.
Objective 1.2: Graduates will identify potential ethical issues in their professional
lives.
Learning Goal 2: Graduates will be effective business managers who will be able to
use analytical tools to make business and managerial decisions.
Objective 2.1: Graduates will have a solid understanding of business fundamentals
and will be familiar with advanced business concepts.
Objective 2.2: Graduates will be familiar with state-of-the-art quantitative analytical
techniques and will apply the techniques in an appropriate way.
Objective 2.3: Graduates will be able to solve problems and make strategic decisions
Learning goal 3: Our graduates will be effective business managers and leaders with
strong communication skills.
Objective 3.1: Our students will be proficient in written and oral communication.
Objective 3.2: Our students will display interpersonal sensitivity in their dealings
with others
Objective 3.3: Our graduates will be able to motivate others and act as leaders
among their peers.
Learning goal 4: Graduates will have a broad vision of globalization.
Objective 4.1: Graduates will be aware of cross-cultural differences.
Objective 4.2: Graduates will understand the political, economic and societal
characteristics of the major global business powers.
2. PURPOSE
Entrepreneurial Management provides a complete overview of the processes, challenges,
and problems associated with founding and financing a new, unquoted company. The
course is intended to give MBA students a better understanding of starting and building
new firms, the various ways an unquoted company can be financed, and how to manage
international and technology-based ventures. By the end of the course, students should be
able to make a sense of the main strategy and financing issues, which must be addressed
when starting or buying a business. Although this course stands alone, it may be
complemented by corporate finance and strategy courses.
3. DESIGN
The course is composed of ten three-hours sessions. It will be centered around case
discussions on the main topics of Entrepreneurial Management: entrepreneurial
opportunity assessment, building a business model and strategy, financing new firms,
venture capital, managing entrepreneurial growth, starting high-technology ventures,
managing international start-ups, and entrepreneurial harvesting and exit. The last session
will be on entrepreneurial issues in the People’s Republic of China. Most case studies are
contemporary cases developed and used for teaching purposes by London Business
School and Harvard Business School.
There is no a book that can teach one all about starting, financing, and managing new
companies because (a) the subject can involve so many variations on any theme, and (b)
there are often no definite answers to the main issues. The best way to deal with such
ambiguity is to become involved in lots of deals, learning from each and building up
one’s experience in approaching the issues involved. It is important therefore that you
read all the reading materials and prepare all cases and participate in the discussion of
each case. This is not a course where you can learn by simply skimming the case before
class and then picking up a few useful points from the class discussion. You will only
learn from struggling with the valuation and financing issues beforehand, reaching your
own initial conclusions, and then building on that experience in the class discussion.
4. PREREQUISITE
The instructional language for the course is English. Students should be proficient in
reading, writing and speaking in English. Students also are expected to have taken
courses or have read a sufficient number of business case studies in English. Basic
knowledge of accounting and corporate finance will be helpful.
5. ASSESSMENT
This will comprise two elements:
A. Class participation and attendance 50%
B. Final paper 50%
A. Class Participation
Because class participation and attendance accounts for 50 percent, it is vital that
everyone prepares properly for each session and participates actively in class discussion.
In doing so, please bear in mind that the quality of your contribution is more important
than quantity. Make your contributions incisive, concise and constructive. Please do not
opt out of discussion once you have made a couple of remarks. If you experience
difficulty in this area you should feel free to discuss it with me.
B. Final Paper
Final paper may be of two different styles: It may be either a case study of an
entrepreneurial firm or venture capital company in China, or analytical and empirical
paper focusing on an entrepreneurial theme in the Chinese context. Whatever the style,
the focus of the paper should be a company or industry in the People’s Republic of China.
The followings are exemplary topics for final paper that students may consider:
• Venture capital in China
• Internet entrepreneurship and startups in China
• High technology new firms in China, e.g., nanotechnology ventures.
• Low technology new firms in China
• High tech industrial districts in China (e.g, Zhongguancun in Beijing)
• The role of social networks, i.e., guanxi, in entrepreneurship in China
• Women versus men entrepreneurs in China
• Family firms in China
• Franchising in China
• New law firms in China
• Commercialization of university R&D in China, e.g., Beida, Tsinghua Universities, or
Chinese Academy of Sciences.
• Religion, Religious beliefs, and entrepreneurship in China
• Chinese culture and entrepreneurship
• Human capital and entrepreneurship in China
• Institutions and entrepreneurship in China
• Overseas Chinese entrepreneurship in China
• Overseas (non-Chinese) entrepreneurs in China
• If you choose other themes for your final paper, please consult with me in advance to
ascertain whether your topic is entrepreneurship-related.
In terms of format, the final paper should be written in English, 22-25 pages, double-
spaced, New Times Roman 12 font. The paper should have an abstract that describes the
main content of the paper, and the abstract should not be longer than 100 words. Tables,
figures, and other pictorial elements can be included. The paper should bear the author’s
full names, student ID number, and functional email address. Please handover your
papers to the teaching assistant on the day of the tenth (final) session. I will distribute a
material that contains detailed instructions and advice on how to write a good final paper
in the third session.
6. ADMINISTRATION
Ms Xin Lingmei of the MBA office is responsible for the overall management of this
course. A teaching assistant will handle all the administrative work. He will deal with all
technical aspects of the course such as photocopying and distribution of reading materials
and case studies. I am happy to see students on Wednesdays at 4.00-5.00 p.m. in my
office – Room 338, New Guanghua Building. If for any reason you are unable to attend a
class, you should notify TA in advance. Weichen Chen, MA student at Guanghua, is the
TA. His mobile phone is 15811101333, and email is [email protected]
7. COURSE CONTENT AND SCHEDULE
Session
Date Topic
Session One Feb 21 Entrepreneurial opportunities
Session Two Feb 28 Building a Business Model and Strategy
Session Three
Mar 7
Financing New Firms: Financial Instruments, Terms and
Structure
Venture Capital as Business
Session Four Mar 14 Financing New Firms: Evaluation and Valuation Issues
Session Five Mar 21 Financing New Firms: Deal Structure
Mar 28 All courses Cancelled due to Industrial Course Week
Session Six April 4 Managing Entrepreneurial Growth
Session Seven April 11 Starting and Managing High Technology Ventures
Session Eight April 18 Managing Multinational Startups
Session Nine April 25 Entrepreneurial Harvesting and Exit
May 2 Labor’s Day-No Class
Session Ten
May 9
Entrepreneurship and venture capital in the People’s
Republic of China
8. READING MATERIALS
Your folder contains all the cases for the course, plus those readings that require attention
prior to each class. Other additional readings will be handed out nearer the session as
appropriate. Lecture notes will be distributed at the beginning of each session.
9. OTHER ISSUES
• Please bring to each session your name stands. Your name should be written in large,
Latin, and bold fonts so that they are visible from different corners of the room. For
example, JESSICA HONGMEI WANG
• Please keep in mind that all the discussions and conversations with your classmates
and the instructor are a part of your professional communications rather than personal
or private socializations. It is, therefore, desirable that you do not ask any private,
personal questions, or make sexist, ageist, and other inappropriate comments and
remarks in the class. Please also avoid to debate politically sensitive issues such as
Taiwan, Tibet independence, Far Lung Gong movement, the leadership and role of
the Communist Party of China, and human rights issues in China.
• I acknowledge and appreciate each student’s learning habits and skills. However, I
would like to advise you not to memorize what your read from course materials but
rather to think creatively and critically when you analyze cases and read teaching
materials. I discourage excessive memorizing.
• In each session, the class will be divided into several groups to discuss cases. I will
fix everyone to a group with different people in each session. This is to make sure
that you discuss issues with different people in various sessions. One thing you
should avoid is to stick to your friends or those whom you know.
• Finally, I would like to ask you not to make unauthorized copies of cases, readings,
and lecture notes, and distribute to persons who are not registered for this course. I
appreciate your cooperation on this matter in advance.
10. THE INSTRUCTOR
Yan?Rock?Gao is clinical professor and associate director at Center for Innovation
and Entrepreneurship at Peking University’s Guanghua School of Management,
Professor Gao earned his PhD degree in Finance from Northwestern University Kellogg
School of Management. Previously, Professor Gao had held faculty, visiting, and lecturer
and positions at China Europe International Business School (CEIBS), California State
University, Baruch College (City University of New York), and Northwestern University.
He worked as financial analyst in Merrill Lynch Co. and Cathay Financial LLC in New
York. His current industry affiliations include founder and CEO of MakeSense Inc.,
Partner at TSFF (a VC fund of fund), and Senior Advisor at New Horizon Capital.
Professor Gao can be contacted at: [email protected]
GOOD LUCK!
SESSION ONE: ENTREPRENEURIAL OPPORTUNITIES
Opportunity is the well-spring of entrepreneurship. All new ventures start from and are
anchored in opportunity. Developing, writing and presenting a business plan upon a
perceived opportunity is the centerpiece of business start-up process. In this first session
we focus therefore on the nature of opportunity and core characteristics of good business
plans. We need to establish at the outset a clear understanding of the difference between
an idea and an opportunity; the tests that you might apply to any opportunity; and the way
in which investors evaluate potential opportunities. In assessing opportunities many of
the analytical tools and insights acquired in your core strategy and marketing courses
need to be brought to bear. Building on this we sharpen the focus to address the
distinctive features of an entrepreneurial opportunity and the questions that you should
ask of it.
Reading:
The Opportunity: Creating, Shaping, Recognising, Seizing. Chapter 3, New Venture
Creation: Entrepreneurship for the 21
st
Century, J . Timmons, Irwin McGraw-Hill, 1999
No case discussions in this opening session.
SESSION TWO: BUILDING A BUSINESS MODEL AND STRATEGY
Once entrepreneurial opportunities have been recognized, and business plan has been
written, entrepreneurs have to formulate and implement suitable strategies and tactics to
create value. In doing so, entrepreneurs have to assess their resources, capabilities, and
competitive and market environments, and come up with viable business model and
strategies that are sustainable. This session is devoted to these and other relevant issues.
Readings:
Applegate, Austin, and McFarlan, 2003, Crafting business models.
Thompson and Strickland, 1998. A Guide to case analysis.
Case: Quicken Insurance: The Race to Click and Close
Case preparation: Please read first reading materials including “Guide to Case Analysis”
Once you, read the material, move on to the case. When you read the case, ask your-self:
What are the traditional strategies and tactics that managers and entrepreneurs adopt in
established industries and firms? What is Quicken Insurance’s business model? Is there
any strategy here? If there is, what is it? What are the main elements or components of
this strategy? How competitive this strategy is? Is this strategy sustainable, and so on?
Try to think of important strategy related questions and issues, and provide answers to
them.
SESSION THREE: FINANCING NEW FIRMS: INSTRUMENTS, TERMS AND
STRUCTURE? VENTURE CAPITAL BUSINESS
The financing deal that the entrepreneur strikes at the outset is the deal that he or she will
live with for many years. Getting it right is therefore essential. But getting it right entails
reconciling a number of different interests: those of the entrepreneur, the private investor
ad the banker. The interests, aspirations and expectations of these parties to a deal are not
necessarily the same. In meeting these different interests, a range of financial instruments,
investment terms and deal structures have been developed. This session will present an
overview of this central topic.
Readings:
Finance for entrepreneurial companies: Financing instruments, 1994, London Business
School.
Introduction to Capital Sources for Entrepreneurial Ventures, Darden School, University
of Virginia.
The Structure and Governance of Venture Capital Organisations, W. Sahlman, 1990,
J ournal of Financial Economics.
Case: Advanced Business Computers
Case Preparation: Please read the notes on financing instruments as background. Then
read the ABC case and put yourself in, respectively, the positions of the banker, the
outside investor and the entrepreneur. From the perspective of each of these prospective
parties to the venture, how do you assess its financing needs, what instruments suit whose
interests, what concerns would be uppermost in your mind, and what deal structure would
you find acceptable? Be prepared to show and defend your deal structure and its impact
on the company’s financial position.
SESSION FOUR: FINANCING NEW FIRMS: EVALUATION AND
VALUATION
In any financial transaction involving an unquoted (private) company, the most critical
factor usually is determining the value of the company. It is also one of the most difficult
things to do – valuing a privately-held company. There are many different techniques for
valuing such companies, yet it is also as much as an art as science. Rarely does any one
method produce the correct answer. First part of this session is devoted to discussions of
alternative ways of valuing companies and assessing the strengths and weaknesses of
each approach in the context of examples in the cases. Not every start-up can be drip-fed
with capital. Biotech companies, property ventures and numerous others require very
large investment on day one, putting even more pressure on the financier to come up with
a creative financing structure to enable the deal to work for all parties involved. Second
part of the session addresses one such opportunity.
Readings:
How Venture Capitalists Evaluate Potential Venture Opportunities, Harvard Business
School, 2004
Twenty Questions You’ll Be Asked By VCs…if you get that far
Valuing Privately-Owned Companies: Valuation Techniques, London Business School,
1993.
A Method for Valuing High-risk, Long-term investments, The “Venture Capital Method”,
Harvard Business School, 2009
Cases: Geotech; ISIS scientific software; Procare; Northsea offshore oil services;
Deep Sea World.
Case Preparation: Please start with reading materials. Read each carefully and struggle
with all the main financial concepts and instruments. You may have to recall what you
learned in introductory courses of accounting and corporate finance. Because this session
is quantitative, students usually find helpful small group discussions prior class. Those
students who did not take accounting or corporate finance before are strongly advised to
discuss these issues informally. In preparing each case, please be sure to do the numbers
and fully prepared to discuss and justify your valuation and valuation method(s) for each
company. When consider Deep Sea World (A) take the role of Norman Yarrow and make
your own assessments of the risks involved in this business idea and decide how to price,
structure and stage the financing.
SESSION FIVE: FINANCING NEW FIRMS: DEAL STRUCTURE
Some of you may end up working in a venture capital firm; others may be calling on VCs
to raise money; yet others may be on the receiving end of the venture capitalists’ pitches
to invest in their funds. A variety of issues are important to understanding how these
funds operate, what motivates the people managing them and how they choose
entrepreneurs to support. This session is devoted to these issues.
Readings:
The Structure and Governance of Venture Capital Organisations, W. Sahlman, 1990,
J ournal of Financial Economics.
The Deal: Valuation, Structure and Negotiation, J Timmons, New Venture Creation:
Entrepreneurship for 21
st
Century, Chapter 14.
Cases: Walnut Associates (A)(B)(C)(D)
Case Questions to Discuss: Walnut (A) (B)
1. As a Walnut investor, what critical issues do you see as requiring more investigation/due
diligence on your part before investing, and how would you accomplish that? What level
of comfort/certainty would you need to have prior to investing?
2. As Bob O’Connor, what issues/concerns do you have relative to Walnut’s investing in
your business?
Case Questions to Discuss ?Walnut (D):
Look at the term sheet from O’Connor’s perspective….
1. What do you think the investors are trying to accomplish?
2. What is a reasonable valuation for RBS in J une 1998? What is the value implied by the
term sheet?
3. What proposed terms do you find most puzzling and why? What would you try to
negotiate, and what you might want to give up to get what you want?
SESSION SIX: MANAGING ENTREPRENEURIAL GROWTH
In the previous sessions, we examined various financial instruments that entrepreneurs
and venture capitalists may use in their financing new firms, and the different methods of
how private firms can be valued. In this session, we explore the issues and challenges of
managing growing firms, and how entrepreneurs can sustain their firms’ growth by
capitalizing on new opportunities. The case is a J apanese firm.
Readings:
Managing Entrepreneurial Growth, Kuratko & Hodgetts, 2004.
Case: Building a Consumer Finance Company in Japan; Jinwoong: Financing an
Entrepreneurial Firm in the Wake of the Korean Financial Crisis (1997)
Case Preparation: This time, I strongly suggest that you read first the case quickly, and
try to think of the main issues and problems facing this firm. After that, please read the
listed material. Once you have done this, please read carefully the case. Try to
conceptualize the growth issues and alternatives, assess each concrete option, and
examine risks and returns of each possible move. In general, think of crucial problems
and issues in this company, and put your-selves in their positions. What strategy, tactics,
and implementation actions you will take in order to take this firm to the next growth
level?
SESSION SEVEN: STARTING AND MANAGING HIGH TECHNOLOGY
VENTURES
Building a global presence in an emerging sector is a fundamental challenge for many
entreprepeneurial companies, particularly technology based firms. Bridging the gap
between technology and market implies bringing together technical expertise and
marketing experience into the founding management team early. Moreover, fast growing
high tech companies usually find that their need for capital grows exponentially with the
growth of the business. In this session we shall explore these issues in detail.
Readings:
The Technological Base of the New Enterprise, Roberts, Entrepreneurs in High
Technology, Chapter 4.
The Art of High Technology Management, Maidique & Hayes.
Case: Trilogy software; Xeikon, S. A.
Case Preparation: In this session we would like to pursue a different learning strategy
from that we followed in all previous sessions. I will not present possible questions for
you here but rather I suggest you read all the case and readings yourself, and think of any
interesting questions that can be discussed in the class.
SESSION EIGHT: MANAGING MULTINATIONAL START-UPS
While globalisation forces are shaping up our lives ever faster and deeper, entrepreneurs
often are the lead players of the new economic game. More and more entrepreneurial
firms expand into international markets at early stage of their growth and many are born-
global firms. This broad phenomenon is labeled as internationalisation of start-ups, and in
this session we will consider financial and management issues of multinational,
entrepreneurial start-ups.
Readings:
Global Start-ups: Entrepreneurs on a worldwide stage, 1995. Oviatt & McDougal.
Global opportunities foe entrepreneurs, 2004, Kuratko & Hodgetts.
Cases: Spotfire; Data Clear: Go Global or Not?
Case Preparation: I hope by now you have learned necessary skills to analyze
entrepreneurial business case studies. Therefore I will not guide you on what and how to
read. Spotfire describes a recently started software company specializing in data analysis
and visualisation. The company has offices and staff in Sweden and the United States.
Going forward, Spotfire’s management faces a number of important challenges. As you
read Spotfire, you may consider the following questions: what is the nature of the
opportunity for the firm? What strategy should the firm pursue over the next 3-5 years?
Spotfire expects to raise additional capital in the first half of 1999. How much capital is
needed? What is the valuation of the company? Under what terms should Spotfire seek to
raise capital? The firm’s development group and the rest of the company work in
geographically separate locations. Is this strategy sustainable? Why/Why not? How
should the firm finance its growth in the future? I leave Data Clear for you to analyze
without guiding questions. Identify the main financial, operational and cultural context
issues in these cases and propose to your classmates to discuss. When you think of
possible questions and issues, please bear in mind that this session is devoted to all the
issues involved in international startups.
SESSION NINE: ENTREPRENEURIAL HARVESTING AND EXIT
The ultimate goal of many entrepreneurs is building a successful business and enjoying
fruits of several years of sleepless nights and hard work. This is the stage when an
entrepreneur has to close a chapter in his adventure. The action is called “Realising
Entrepreneurial Value”. The market for unquoted companies is by its nature highly
illiquid. This can pose financial difficulties for entrepreneurs whose wealth is often
largely tied up in their company. This situation becomes more complex when there are
multiple shareholders with different needs and expectations. Since an investment in a
privately-held company is illiquid, experienced investors and prudent entrepreneurs must
always be sensitive to issues which might affect their ability to realise maximum value
from their investment. This includes (1) sensing when the time is right to seek to harvest
and (2) determining the best way to go about it. This session deals with the options
available to entrepreneurs and factors that can impinge on the harvesting decision and
processes for achieving a harvest.
Readings:
The Harvest and Beyond, Timmons, Chapter 18
Case: RightNow Technologies
Case Preparation: TBD
SESSION TEN: ENTREPRENEURSHIP AND VENTURE CAPITAL IN THE
PEOPLE’S REPUBLIC OF CHINA
In this concluding session, we will discuss the main problems and issues of starting and
managing new firms in the context of the People’s Republic of China – the mainland
China. We will cover both entrepreneurial environment in general, with special emphasis
on China venture capital industry. Various Chinese specific issues will be discussed, in
comparison with world standard practice, such as local government’s role in promoting
entrepreneurship, tax issues, special organizational VC structures, the trend of VC
industry, developments and obstacles in financial institution and capital market. Finally
we discuss the implications of China’s renewed reform on the issues we covered.
Readings:
Financing new ventures in China: System antecedents, and institutionalization, White,
Gao, & Zhang, 2005, Research Policy.
The Seven Disciplines for Venturing in China, MIT Sloan Management Review, 2006
Others may be distributed in class.
THANK YOU AND GOOD BYE!
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