Venture Capital and Private Equity

Course Number 1428

Senior Lecturer Jo Tango

Senior Lecturer Archie L. Jones

Fall; Q1Q2; 3.0 credits
28 Sessions

Overview

Note: this course is not for students with prior full-time VCPE experience; it is for students new to VCPE.

Professor Josh Lerner started the Venture Capital and Private Equity (VCPE) course in 1996, and it today is one of the longest-running and largest offerings in the second-year curriculum.

Designed as a survey course, the curriculum examines the firm-wide managerial issues that VCPE investors encounter. This course does not help build deal-execution skills; students instead should enroll in Entrepreneurial Finance, Private Equity Finance, or Venture Capital Journey.

The course covers three broad categories:

THE INVESTORS AND
FUND TERMS

PRIVATE EQUITY

VENTURE CAPITAL

An LP’s goals and constraints
Asset allocation underpinnings: mean-variance analysis, Modern Portfolio Theory, the Efficient Frontier, and Monte Carlo simulations
The “Yale Model”
Key fund terms: fees, expenses, carried interest, hurdle rates, and GP co-investment
How fund cash flows work
How LPs choose GPs
The influence of Cambridge Associates

How and why investors structure deals
How PE firms add value
How investors screen and choose investments
Getting a deal through the Investment Committee
Role of debt providers and where incentives overlap and diverge
Different PE business models

Which businesses “fit” with VC
The VC’s role
How to source for and screen investments
Managing growth
Evaluating a portfolio
Pro-rata investing’s pros and cons
Creating a new firm and fundraising for a first-time fund
Compensation and control within a firm
Succession

Course Content

Class Sessions:

Through case discussions and intimate interactions with guests, you will get a true feel for what life is like in VCPE. Guest speakers the past three years:

3G Capital (Alex Behring, Daniel Schwartz, Justin Fox, and Mike Spinello)
Accel (Andrei Brasoveanu)
Aldrich Capital Partners (Mirza Baig, Raz Zia)
Altos Ventures (Anthony Lee, Ho Nam)
Apax Digital (Marcelo Gigliani, Dan O’Keefe)
Bessemer Venture Partners (Mary D’Onofrio, Elliott Robinson, Janelle Teng)
Blackstone (Michael Chae, Stephen Schwarzman)
Broadway Angels (Sonja Perkins)
CalSTRS (Margot Wirth)
Cambridge Associates (Jody Fink)
Carlyle Group (Tanaka Maswoswe)
Centerbridge (Billy Rahm)
CPPI (Shane Feeney, John Graham, Nate Goulbourne, David Lubek, Deborah Orinda)
CRV (Jon Auerbach)
Founder Collective (David Frankel, Eric Paley, Micah Rosenbloom)
IGNIA Partners (Álvaro Rodriguez)
Individual Foodservice (Ken Sweder)
Innova Capital (Andrzej Bartos and Krzysztof Kulig)
Interline (Mike Grebe)
Johnson Media (Kevin D. Johnson)
KKR (Raj Agrawal, Joseph Bae, Rob Lewin)
Lone Star (André Collin)
Luminate Capital Partners (Hollie Haynes)
NextView (Rob Go)
Oaktree (Raj Makam)
Owl Capital (Jen Fonstad)
P2 Capital (Josh Paulson)
Pear VC (Keith Bender, Mar Hershenson)
SIN Capital (David Sin)
Stone Arch Capital (Clay Miller)
TA Associates (Jennifer Mulloy)
Tectonic Ventures (Juan Luis Leungli)
True Ventures (Jon Callaghan)
Warburg Pincus (Sean Carney, Bess Weatherman)
Wheelhouse Partners (Ann Berry)
Whiskey Capital (Stephen Campbell, John Shumate)
Yale Investments Office (Amy Chivetta, John Ryan, David Swensen)
York Capital (Jeremy Blank, Bill Vrattos)

Submissions:
Some cases will require a submission. These will be graded pass/fail.

Team-based final paper:
Students will work in teams of two. The teams will choose a topic that can cover anything that is VCPE-related. Examples of papers are posted on Canvas. A small group of authors will present their findings to the class. N.B.: the paper will be due before Thanksgiving break.