Message for instructors

Entrepreneurial finance is increasingly taught across a wide range of higher educational institutions, primarily in business schools, but increasingly also in engineering schools, law schools, and economics departments. In many cases the subject is taught in a stand-alone elective course, like Entrepreneurial Finance, or Venture Capital. In other cases, the material is taught as part of an entrepreneurship or financial management course. This book is meant for all these kinds of classes.

The primary audience for this book is students in MBA, Masters in Finance (MSc), and advanced undergraduate courses. Additional audiences include other master and doctoral level students in business disciplines. The book is also suited for practitioners, such as aspiring or first-time entrepreneurs, and venture teams in accelerator programs. First-time venture investors, such as venture capital associates, angel investors, corporate investors will also find what they need in this book. Finally, the book is suitable for executive education, as well as entrepreneurship courses at technical universities that teach scientists and engineers about venture formation.

The book takes a pedagogical approach based on five fundamental pillars:

• First, the book is firmly rooted in academic research. We ourselves have actively contributed as researchers to the entrepreneurial finance literature for over 20 years. We are motivated to translate the academic frameworks and insights into common language that general audiences can understand and benefit from. Our own background is in finance and economics, but we have made deliberate efforts to include insights from many other academic disciplines, especially entrepreneurship, strategic management, organizational behavior, marketing, law, human resources management, accounting, and public policy.

• Second, this book aims to provide concrete insights and tools that students can practically apply. We develop several novel practical tools based on the concepts developed in the text. One is the Venture Evaluation Matrix which is a qualitative framework for analysing the attractiveness of a business plan. Another is a financial projections spreadsheet that can be used by students to analyse WorkHorse’s financial projects, or to develop their own projections. As readers proceed from chapter to chapter, they will discover more tools. These tools and several additional materials are freely available on this website. 

• Third, we take a global perspective, reflecting the increasingly global nature of entrepreneurial finance. We anchor our book in the US model, but we frequently discuss alternative approaches, practices, and examples from other countries. We believe this approach is appropriate for both US and non-US audiences. US audiences will look for US practices as their initial reference point but will want to know more about other parts of the world. Non-US audiences understand that the US, and especially Silicon Valley, is the epicentre of entrepreneurial finance, and thus constitutes a useful benchmark for other countries. They will therefore be eager to understand the US model, and then relate it back into their own institutional context.

• Fourth, we provide a comprehensive overview of the entire fundraising process, with particular attention to the diversity of investor types. We strive to provide an understanding of why things are done in certain ways, and how the various steps in the process are interconnected with each other. For this reason, the first chapter introduces two overarching conceptual frameworks that structure the content of the book. The first framework, called FIRE, describes how entrepreneurs and investors interact over the fundraising cycle. The second framework, FUEL, explains in detail how different types of investors function themselves.

• Fifth, we conceived the story of a fictional start-up (“WorkHorse”) to create a comprehensive illustration of key concepts. The story unfolds through a sequence of boxes that are weaved into the main analysis. It is an educational tool that vividly illustrates and applies all the core concepts with a simplified yet realistic story. Its dynamically consistent storyline also allows students to appreciate how the numerous aspects of entrepreneurial finance are interconnected with each other.

This book assumes very little prior knowledge of entrepreneurship and finance. Students will benefit from understanding basic business vocabulary (e.g., what marketing is), and it helps to have a basic understanding of finance fundamentals, such as risk and returns. The remaining concepts are introduced if and when needed. Importantly, however, this book has not been “dumbed down” to make it more appealing to a mass audience. Our approach is instead to take the reader step-by-step through material of increasing complexity.

We enrich the main text with analysis of data and practical examples that are placed into Boxes, Tables, and Figures. While the academic foundations inform all our analysis, we choose to keep the main text uncluttered. Consequently, all academic references are put into endnotes.

The book is accompanied by several additional materials freely available from this website. These include chapter appendices and all of the spreadsheets discussed in the book, several of which contain novel material not available anywhere else. For instructors, separate online materials available through OUP, contain a complete set of slides, a test bank including some advanced numerical exercises, suggestions on how to configure different types of courses of different length, suggested case studies, and other additional materials.