Professor: Steven Zatechka, PhD, MBA Office Hours / Availability: By and appointment

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1 COURSE SYLLABUS FIR ENTREPRENEURIAL FINANCE Spring Semester, Credit Hours Meeting Time: Thursday / 7:10-10:10pm Classroom Location: FCB 257 Professor: Steven Zatechka, PhD, MBA dsztchka@memphis.edu Office Hours / Availability: By and appointment BIOSKETCH Steve earned his PhD from the University of Nebraska Medical Center and his MBA from the University of Memphis, Fogelman College of Business and Economics. He completed his postdoctoral fellowship with the Howard Hughes Medical Institute at St. Jude Children s Research Hospital. Steve is experienced in the development and utilization of gene targeting technologies for the engineering of animal models of disease, and the development of applied biotechnologybased protocols. Steve is the inventor of US BIOLOGIC s patented production platform technology. He leverages these experiences to translate innovative technologies into commercial applications and markets, as well as optimize product manufacturing and distribution. LinkedIn COURSE DESCRIPTION Entrepreneurship and innovation are becoming increasingly interchangeable terms in the business world for both established firms ( intrapreneurship ), and within the start-up and growth realm. Innovation seeks to continually provide a means to address competitive advantage, growing market demands, and establish sustainability. Translating innovation towards commercial application requires a working knowledge of the supporting options for the networks, financial resources and vehicles, and legal counsel available. This course will evaluate the entrepreneurial cycles of start-up and growth companies, and will further explore the importance of the intrapreneurial department within established companies for generating novel projects and spin-outs.

2 Directions of the course will include the simulation and charting of the challenges surrounding the lifecycle and time-line of typical start-up organizations from problem identification, presentation of solutions and invention, product design and development through manufacturing, to financing, marketing, and sales. The course will further provide guidance in the identification of innovative thinking to include leadership tactics, and the tools necessary to identify and establish the networks necessary for a successful venture operation. Principal course structure, progressing through the semester, will be founded on the platform of an evolving capitalization table, defining its purpose, structure, and application. The Cap Table will be the primary reference tool and guide for the course. The course will track the Cap Table, in the context of the course outline, from business foundation, valuation, and company shares, through capital raise(s), dilutions and ownership (including voting rights). Funding options and issues will be defined and explored; funding rounds will be evaluated for what defines good money vs. bad money in terms of company and stakeholder success. Finally, the course can serve as a sounding board of individualized guidance for qualifying innovative ideas with a path for translation towards commercialization. COURSE OBJECTIVES This course is designed to guide students in their understanding of the risk involved in the translation of a technology from R&D through to commercialization. Innovation and invention is a process requiring a fast-paced, well-managed organizational methodology. Nevertheless, the process can be one that is, in elementary terms, fun. To this end, the course objectives are to equip students to be leaders in the areas of: 1. Critical problem solving, ideas formulation, and decision analysis 2. Risk identification and management 3. Organizational management and prioritization 4. Networking (talent and resources) 5. Financing, and financial management 6. Technology transfer, intellectual property management, patents, trademarks 7. Commercial technology translation 8. Legal support 9. Sustainable creative elements 2

3 COURSE MATERIALS 1. Required text: Entrepreneurial Finance; Smith, Smith, Bliss, Ed.; Stanford Economics and Finance, Publ. (Student Resources Homepage) a. Supplementary Simulation for projects: Venture.SIM will be used as a resource tool for examination of Capitalization Table structure. 2. Complementary (secondary) text: Raising Entrepreneurial Capital, 2 nd Ed. (for consideration and reference) GRADING 1. Projects a. Capitalization Table 150 b. Business Plan Project Compilation Participation 250 Total 1000 Scale: Above 899 A B C D Below 600 F COURSE POLICIES 1. Attendance Class attendance is required for success in this course. In the event an absence is necessary, the student is required to maintain progress with reading and project assignments. 2. Academic Integrity The University of Memphis has clear codes regarding cheating and classroom misconduct. Questions regarding academic integrity or plagiarism may be addressed by accessing the FCBE Standards for Academic Integrity. 3

4 CALENDAR Date Class Topic Chapter Week 1 Jan 19 Course Intro: Innovation and Entrepreneurism 1 Week 2 Jan 26 Business Plans, Corporate Organization, Legal (IP) 2 & 3 Week 3 Feb 2 Market Validation and Aligned Venture Strategy 4 Week 4 Feb 9 Simulation Exercises and Decision Analysis 5 Week 5 Feb 16 Forecasting 6 Week 6 Feb 23 Assessing Financial Needs 7 & 8 Week 7 Mar 2 Venture Valuation 9 Week 8 Spr Break Week 9 Mar 16 Capitalization Tables and Simulation Exercises Perspectives on Value to Investor and Entrepreneur 10 & 11 Week 10 Mar 23 Financial Contracting 12 Week 11 Mar 30 Valuation Contracting 13 Week 12 Apr 6 Financial Contracting 14 Week 13 Apr 13 Financing Choices & Harvesting 15 Week 14 Apr 20 Financing Review and Cap Table Simulation 16 Week 15 Review Final Exam Business Plan Project Due FINAL EXAM SCHEDULE The final exam schedule for this class will be scheduled according to the Registrar Academic Calendar website. 4

5 DETAILED OUTLINE [Proposed, and dynamic] I. Section 1: Ideation and Observed Need 1. Making a case for creativity 2. Creative thinking as a skill A. Valuing diversity in thinking 3. Thinking preferences 4. Creativity styles B. Setting the stage for success 1. Basic philosophy 2. Having a vision 3. Setting the right attitude 4. Recognizing and avoiding mental blocks 5. Avoiding mindsets 6. Risk taking 7. Paradigm shift and paradigm paralysis 8. Individual and team work C. Creativity in problem solving 1. Problem Definition 2. Understanding 3. Representing 4. Pattern Breaking a. Thinking differently b. Changing your point of view c. Watching for paradigm shift d. Challenging conventional wisdom e. Lateral thinking, provocation (escape, random word) f. Mind stimulation: games, brain-twisters and puzzles 5. General Strategies 6. Idea-collection processes a. Brainstorming/Brain-writing b. The SCAMPER methods c. Metaphoric thinking d. Outrageous thinking e. Mapping thoughts f. Other (new approaches) 7. Using Math and Science a. Systematic logical thinking b. Using math concepts 8. Eight-Dimensional (8D) Approach to Ideation a. Uniqueness b. Dimensionality c. Directionality d. Consolidation e. Segmentation f. Modification g. Similarity 5

6 h. Experimentation 9. Systematic inventive thinking: The TRIZ methodology a. Levels of inventions b. Evolution of technical systems c. Ideality and the ideal final result (IFR) d. Stating contradictions and the contradiction table e. 39 standards features and 40 inventive principles f. Separation principles g. Using physical, geometrical, and chemical effects, fields D. Decision and Evaluation 1. Focused thinking framework 2. Six thinking hats 3. PMI 4. Ethical considerations E. Design for Interaction 1. Introduction to design for interaction II. Section 2: Market Validation 1. Is there a business opportunity III. Section 3: Legal / Regulatory / Intellectual Property, and COGS 1. Is there a business opportunity B. Introduction to regulatory 1. Federal agencies and oversight C. Introduction to intellectual property: Patents, Copyrights ã, Trademarks â, Trade Secret, Unfair Competition D. Cost of goods sold 1. Revenue models and pricing IV. Section 4: Path to Market A. Time B. Money V. Section 5: Financial Management, and Corporate Structure A. The Capitalization Table (Dynamic and Continual) 1. Valuation a. Pre money b. Post money c. Stake percentages / ownership 2. Shares a. Preferred b. Common c. Options 3. Fundraising and Investment Models (Definitions and Challenges) a. Angel b. Debt instruments c. VC 4. Financial Management 6

7 a. Balance sheet b. Cash flows B. Corporate Structure 1. Inc. 2. LLC 3. Proprietorship 7