1. 6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 1 Course Coverage Investment and Capital Budgeting Routine CapEx Growth CapEx Expansion / Diversification Investments Greenfield Projects Acquisitions Strategic Investments Corporate Venturing/ Intrapreneuring Entrepreneurial Ventures Large Scale Investments Business Risks – High Uncertainty Information Problems Agency Issues Other Capital Market Imperfections

2. 6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 2 What is New Enterprise? Broadly defined as –Grass root level new project –Substantial expansion –Substantial Strategic and / or financial investment with a significant management involvement Part of existing firms’ growth strategy –Organic or inorganic –Internal venture creation (aka intrapreneuring) Entrepreneurial activity

3. 6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 3 Applications of Learnings Business Development / Strategic Planning –Intrapreneuring –Strategic Investments –Corporate Venturing Entrepreneurial Ventures Financial Services –Funds Syndication –Direct Equity Investing

4. 6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 4 Key Issues addressed How do we evaluate new investment opportunities, primarily from a financial perspective? How do we fund and structure capital for early stage businesses? How do we align the interests of the owners (investors) and the managers or owner- managers? How do we value the business? How do we mitigate risks once the venture has been funded? How do we plan liquidity / exit from these investments? THIS COURSE DOES NOT TEACH ANY NEW TOOLS / TECHNIQUES. IT GIVES YOU AN OPPORTUNITY TO APPLY WHAT YOU KNOW ALREADY. In that sense this Course is different from many other electives.

5. 6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 5 Financing Aspects Resource Mobilisation Capital Structuring Contracting Valuation Ownership and Dilution Institutional Aspects Structuring of VC/PE funds Organisation of funds Investment Strategies Fund raising Performance measurement Industry Structure & Competition VC/PE as an asset class VC / PE

6. 6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 66/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 6 FAQs Q: Is it a course on Entrepreneurship? A: No. This is about how to manage financing related key issues once the decision to go into biz has been made? Q: Is this a course on VC? A: No. It does draw upon processes from the world of VC and project financing that may be used in early stage financing. Q: Whose perspective does the course address: Entrepreneur? Or, Investor? A: In an ideal world, the perspectives cannot be different. But this course is about how each may understand the other’s perspective. Q: Is it a quant intensive course? A: No. It does not use higher math beyond CF. But it is numerically intensive, so you need to like numbers. Q: Is it a “precise” course, given that it uses so many cases? A: No. In the real world of businesses there are no precise answers. To enjoy this course you have to be able to accept / deal with ambiguity.