BA 560

Venture Management

Fall Term 2008

Professor: Thomas Dowling (dowling@bus.oregonstate.edu)

Office: Bexell 224C

Office Hours: Monday: 3:00 – 4:00 & 9:00 pm to 9:30 pm

Thursday & Friday: Scheduled IBP Team Meetings -

Thursday 9:00 – 12:00 & Friday 8:00 – 12:00, 2:00 – 5:00

And by appointment

Required Reading & Cases:

Items #1 - 5 are available at the OSU Bookstore:

1) New Venture Creation – Entrepreneurship for the 21^st Century

7^TH Edition – Jeffry A. Timmons

Irwin McGraw-Hill

2) Annual Editions – Entrepreneurship

5^th Edition - McGraw-Hill/Dushkin

3) Course Readings and Case Packet – Dowling, BA 560

4) The E-Myth Revisited – Why Most Small Business Don’t Work and What to Do About It

2^nd (2001) Edition – Michael E. Gerber, Harper Business

5) Project Management:  The Managerial Process

4^th (2008) Edition – Gray, C. F. & E. W. Larson

(Note: Only students taking BA 562 in winter term need to purchase this text.)

6) Wall Street Journal Subscription – Sign up form to be passed around in class.

(Student subscription provides both print & on-line access. Readings from the WSJ and the ‘Start-Up Journal’ will be used throughout the academic year.)

7) Reading materials handed out in class by the instructor

The Venture Management course focuses on the concepts, skills, know-how, information, attitudes and alternatives that are relevant for start-up and early stage entrepreneurs and entrepreneurial managers in larger firms. This is a critical course not only for its importance to your career, but in the OSU MBA program. This course anchors the

BA 568 Integrative Business Project (IBP).

The course has two primary objectives:

1.) To provide the learning forum for future entrepreneurs (and those of you who have already started new business ventures) to acquire the requisite skills to make decisions that increase the odds of new venture success. One of the course learning outcomes is that each student will enhance his/her capacity to envision, anticipate, and orchestrate the key issues and factors associated with a business start-up.

2.) To provide a framework for effective entrepreneurial practice from the perspectives of the founder and the key stakeholders (including partners, investors, employees, and customers) that will make the difference in the ultimate success or failure of the venture.

One of the central themes of the course is the critical role of opportunity creation and recognition. Another is the impact of the founder, and founding management team, in making an opportunity a viable business venture.

This course is especially relevant for aspiring entrepreneurs bent on launching and growing a business that is quite profitable and exceeds several million dollars in sales. Jeffery Timmons’ view expressed in one of the course texts is that it is often riskier, more demanding, and less rewarding to think too small. Through lectures, class discussion and activities, guest speakers, and the IBP development and review, this course simulates the realities of the entrepreneurial process.

BA 560 will also provide an opportunity for each student to evaluate her/his own desires and prospects for a career as an entrepreneur. The course provides a complete framework for selecting a viable opportunity; developing marketing, management and operational strategies; building the financial projections that provide proof of attractive returns for investors and founders; identifying appropriate and available sources of funding; and launching the business successfully.

In examining issues and problems of new ventures the course will help you:

· Identify and determine what entrepreneurs need to know about the critical driving forces in new venture success.

· Identify how successful entrepreneurs and investors create, find and differentiate profitable and durable opportunities from “other good ideas,” and how opportunities evolve over time.

· Evaluate and determine how successful entrepreneurs and investors create and build value for themselves and key stakeholders (customers, investors, and employees).

· Identify and determine the necessary financial and non-financial resources available for new ventures, identify the criteria used to screen and evaluate proposals, their attractiveness and risk, and how to obtain start-up and early growth capital.

· Determine the critical tasks to be accomplished, the hurdles to be overcome during start-up and early growth, and what has to happen to succeed.

· Apply venture opportunity screening techniques to an actual start-up idea, and subsequently, develop and prepare a business plan (the IBP) suitable for guiding the start-up.

· Develop and analyze financial projections for start-up ventures.

· Identify the future consequences of decisions made by entrepreneurs; options that are precluded or preserved; and the nastier minefields and pitfalls one has to anticipate, prepare for and respond to.

· Determine decisions that can be made to increase the reward to risk ratio at various stages of the company’s development.

· Determine the important factors outside the control of the founders, and how critical and sensitive the current context and timing are to all of the above issues.

Course Content and Methods

The course will accomplish the learning objectives through a diverse mix of methods and activities including:

· Lectures and presentations

· Course readings

· In-class team assignments and exercises

· Analysis and discussion of actual cases

· Executive and entrepreneur guest speaker presentations

· Field research

· Business plan (IBP) preparation

· Meetings outside of class with the instructor and project mentors/resource persons regarding the development of the business plan (IBP)

Course Overview

As can be seen from the schedule of assignments that follow, the course is divided into five sections:

1. The Entrepreneurial Process

The first class sessions provide an overview and framework for the course and an introduction to the driving forces behind successful ventures.

2. The Opportunity, The Business Plan and The Team

At the heart of any new venture is (1) an idea for a product or service and (2) a belief that a profitable market space can be created. While there is an abundance of ideas, there is a real shortage of superior ones that will survive and become the basis for a profitable and durable business. Those that do are customer and market driven. High potential ventures often are conceived and developed through a disciplined process of preparing a business plan. Even more frequently these more promising businesses have multiple founders. This section of the course will examine these two central factors in successful new ventures.

We will examine several cases in-depth to determine the criteria and methods entrepreneurs and venture capital investors use to find, create, screen and evaluate venture opportunities. The Venture Opportunity Screening Guide and its companion QuickScreen are introduced and applied to your own venture projects to put these practices to work.

3. The Entrepreneurial Mind

What are the relevant attitudes, skills and know-how for start-up entrepreneurs? Class discussion of the results of in-depth interviews with entrepreneurs and course lectures will provide the framework for addressing these issues.

4. Financing Entrepreneurial Ventures

We will focus on seed, start-up and growth capital and the practical skills needed to raise capital, craft the investment agreement, and sell the deal valuation and deal structure. Cases will examine financing issues from start-up through early rapid growth, and maturity.

5. The Harvest and Beyond

The final sessions will utilize a case and wrap-up lectures to examine the shaping of an entrepreneurial harvest/exit strategy.

Student Responsibilities

Attendance

As this is a discussion oriented course, the most important part of the learning will take place in the classroom and in your IBP teams. Your contribution in class is essential; your participation will be significantly missed if you are absent. Thus, I consider attendance to be very important. Attendance will be monitored and your class participation will have a major impact on you final course grade. Even when absent, you are responsible for ensuring that assignments are handed in on time.

Class Participation

One necessary skill for job holders and managers at all organizational levels is to effectively articulate the methods and results of business analysis; a second is to convince others of recommendations based on such analysis. Active class participation is an invaluable opportunity to develop and hone these skills. Therefore, class participation is an essential part of the learning experience in this course. By failing to take an active role in class discussions, you lose a major incentive to prepare your analysis with the thoroughness that leads to real understanding, and you forego the opportunity to develop career essential communication skills.

Therefore, you are expected to be prepared to discuss every case, to make brief presentations when called upon, and to respond to the points made by other students. At a minimum, case preparation should enable each student to:

A. Clearly explain (not merely identify) the major issues in the case

B. Describe the impact of these issues on the venture

C. Formulate alternative courses of action which directly address the issues

D. Recommend alternatives to founder(s)/venture management

Assignments and Grading

Students will be evaluated according to their performance on the following individual and group assignments. Students are encouraged to discuss their ideas and analyses with others, both inside and outside their IBP/business plan teams. However, individual written assignments should reflect only your individual effort, and group assignments should reflect only the team's efforts. As the class will discuss each written assignment on the day it is due, late written assignments will not be accepted.

Team Assignments

The IBP thesis (new venture business plan) is based on an enhanced version of Timmons’ business plan outline prepared by the instructor and the College of Business graduate faculty. Each project team will determine a potential start-up opportunity that all team members support. Alternatively, teams may choose to do an IBP project using OSU research discoveries (IP) sponsored by the Office of Technology Transfer that are ready for commercialization or an industry sponsored project.

Professor Erik Larson and I will team teach several of the BA 560 sessions this fall term and in BA 562 winter term. Prof. Larson will assist IBP thesis teams with effective formation strategies and techniques that are based on project management best practices. Each IBP thesis team will be required to:

· create and use a SharePoint site for team documents

· conduct at least one virtual meeting using Live Meeting and analyze the effectiveness of this approach

· prepare a IBP team Charter

· create and maintain (keep up to date) a Rolling Wave IBP Schedule

· participate in scheduled IBP teambuilding activities and assessments; write an individual analysis paper based on effective project team dynamics using your team as a ‘live’ case.

Peer Evaluations

Each student's contribution to the team will be evaluated by her/his peers at the end of each term using an evaluation process to be provided by the instructor. This evaluation will help determine the student's individual team assignments grade.

Individual Assignments

Individual student assignments are as follows:

· Interview an Entrepreneur Assignment: This assignment is based on the exercise in the Timmons’ text on pages 67-68 entitled ‘Visit with an Entrepreneur’. Follow the steps in the exercise using the interview questions you feel are appropriate for your interviewee. Step 4 of the exercise describes the written portion of the assignment. Limit your writing to 5 double spaced pages, 12 point type, 1” margins.

Rather than a transcript of your discussion, the written analysis should be a synthesis of your thinking as a result of the discussion. Make certain the last page of your writing focuses on the lessons you have learned about entrepreneurship and the entrepreneurial process as a result of this activity. I will be calling on students in class to highlight these “lessons learned”.

· Quizzes: There will be 5 quizzes throughout the team. All questions will be short essay in format. Quizzes will cover class readings, lectures, class notes, and class activities. Materials from guest speakers will also be included. Quizzes will be 25 to 30 minutes. On days when there are quizzes, the quiz will be given at the beginning of class. Quizzes will emphasize synthesis, critical thinking, and application.

· Case Analyses: You will be required to write a case analysis for each case discussed in class. Each case analysis will be written as if to the founder(s)/venture management team of the case company. The instructor will provide focus questions for analysis for each case in a separate handout.

Final Grades - will be based upon the following distribution of points:

Group Assignments:

Prof. Larson assignments: SharePoint site,

Virtual Meeting (25 pts), IBP team

Charter (25 pts), Rolling Wave

Schedule (25 pts) 7.5% ( 75 points)

New Venture Business Plan (IBP) 22.5% (225 points)

(written assignment = 175 pts, presentation = 50 pts)

Individual Assignments:

Prof. Larson Assignment: IBP

Team Dynamics Assessment Paper 5.0% (_50 points)

Interview an Entrepreneur Assignment 10.0% (100 points)

Case Analyses (n=4) 20.0% (200 points/50 points each)

Quizzes (n=5) 25.0% (250 points/50 points each)

Class Participation 10.0% (100 points)

The expanded letter grade system is used in BA 560.

The OSU Student Code of Conduct and OSU Graduate School policies on academic honesty will be strictly observed. To read these policies you may go to: http://oregonstate.edu/admin/stucon/achon.htm

If you have questions about academic honesty issues, please ask me for clarification.
Course Schedule

[T] = Timmons Text [AE] = Annual Editions [EM] = E-Myth [HBR] = Class Packet

[GL] = Gray/Larson [H] = Class Handouts ** = Preparation for Executive Presentations

Class Session	Course Readings Due	Assignment(s) Due/Quiz Dates
Class 1 9/29/08	Course Introduction: · Syllabus & Schedule review · IBP team activities · IBP thesis format & content · BA 560 relationship to BA 590 & BA 562 Prof. Erik Larson explanation of teambuilding activities & assignments Brian Wall, Director of OSU Office of Technology Transfer & Prof. John Turner presentations on IP projects available to IBP teams; NDA explanation and forms; IBP funding opportunities	Purchase required course books & materials
Class 2 10/6/08	[T] Ch. 1 The Entrepreneurial Mind [T] Ch. 2 America’s Entrepreneurial Revolution Goes Global [T] Ch. 3 The Entrepreneurial Process [T] Ch. 4 The Opportunity: Creating, Shaping, Recognizing, Seizing [AE] #1. The Engine of Capitalist Process: Entrepreneurs in Economic Theory [AE] #2. Building Entrepreneurial Economies [AE] #3. Entrepreneurs in the U.S. Face Less Red Tape [AE] #4. Who are the Self–Employed? [AE] #9. The New Road to Riches [AE] #11. How Entrepreneurs Craft Strategies that Work [EM] Part I: The E-Myth and American Small Business	Teambuilding Activity Assignment (from Prof. Larson) Fall term IBP leader designation; primary and back-up meeting times for the IBP team meetings Preference list for OSU IP projects or top 3 choices for team selected IBP topic Each IBP team must have a decision on their choice for the thesis topic by Week 3. IBP team meetings with Prof. Dowling on Thurs 10/2 and Friday 10/3 will focus on the options teams are considering and pros/cons of each.
Class 3 10/13/08	Prof. Erik Larson – Team Lecture Presentation: · SharePoint site creation & maintenance · Virtual Meeting · IBP Team Charter · Rolling Wave Scheduling [GL] Chapters 1 & 4
Class 4 10/20/08	[T] Ch. 5 Screening Venture Opportunities [T] Ch. 6 The Business Plan [HBR]: Knowing a Winning Business Idea When You See One [AE] #10. One More Time. . . Should Small Companies Attempt Strategic Planning? [AE] #15. How to Write a Great Business Plan [AE] #16. Outline for a Business Plan: A Proven Approach for Entrepreneurs Only	Quiz #1 – Material from Classes 1&2 Howard Schultz and the Starbucks Coffee Company Case Assignment – HBR (Class Packet) From Prof. Larson: · IBP Team Charter
Class 5 10/27/08	[T] Ch. 7 The Entrepreneurial Manager [AE] #5. The Making of an Entrepreneur [AE] #8. To Get Ahead, Own the Store [AE] #14. Listen to Your Inner Entrepreneur [EM] Part II: The Turnkey Revolutions: A New View of Business	Dow Chemical Corporate Entrepreneurship Case Assignment – IMD (Class Packet) From Prof. Larson: · IBP Rolling Wave Schedule
Class 6 11/03/08	[T] Ch. 8 The New Venture Team [T] Ch. 9 Personal Ethics and the Entrepreneur [AE] #6. Leader of the Pack [AE] #7. Success Rules! [AE] #12. Seven Keys to Shaping the Entrepreneurial Organization [AE] #13. Characteristics of a Successful Entrepreneurial Management Team [EM] Part III: Building a Small Business That Works!	Quiz #2 – Materials from Classes 4&5 Interview an Entrepreneur Assignment From Prof. Larson: Individual Team Dynamics Assessment Paper Profs. Larson & Dowling will meet jointly with each IBP team during the Thurs/Fri scheduled meetings to discuss IBP team performance & dynamics

Class 7 11/10/08	[T] Ch. 10 Resource Requirements [T] Ch. 12 Entrepreneurial Finance [HBR] New Venture Financing [HBR] How Venture Capitalists Evaluate Potential Venture Opportunities	Zipcar: Refining the Business Model Case Assignment – HBR (Class Packet) ** Executive Presentation
Class 8 11/17/08	[T] Ch. 13 Obtaining Venture and Growth Capital [HBR] Angel Investing [AE] #17. Pursuing Venture Capital [AE] #18. Venture Impact 2004: Venture Capital Benefits to the U.S. Economy [AE] #19. Venture Capitalists’ Assessment of New Venture Survival [AE] #24. Harnessing Innovation [AE] #26. Field of Dreams [AE] #27. Negotiating Venture-Capital Transactions	Quiz #3 – Materials from classes 6&7 For Prof. Larson: Completed Virtual meeting; Virtual Meeting analysis in class with Prof. Larson
Class 9 11/24/08	[T] Ch. 14 The Deal: Valuation, Structure, and Negotiation [T] Ch. 15 Obtaining Debt Capital [HBR] Funding New Ventures: Valuation, Financing, and Valuation Tables [AE] #20. Ready or Not? [AE] #21. The Entrepreneur’s Financial-Fitness Checklist [AE] #22. Solving the Puzzle of the Cash Flow Statement [AE] #23. The ABC’s of Borrowing for Growth [AE] #25. A Kick-Start for Entrepreneurs [AE] #28. The Do’s and Don’ts of Fundraising [AE] #29. All in the Delivery	Nantucket Nectars Case Assignment - HBR (Class Packet) ** Executive Presentation
Class 10 12/1/08	[T] Ch. 16 Managing Rapid Growth [T] Ch. 19 The Harvest and Beyond [AE] #30. Are You Built to Grow? [AE] #31. Managing Growth [AE] #32. The Big Question: To Grow or Not to Grow? [AE] #33. Three Strategies for Managing Fast Growth [AE] #34. Managing Global Expansion: A Conceptual Framework [AE] #36. Harvesting Firm Value: Process and Results [AE] #37. Choosing Your Exit Strategy [AE] #38. The Initial Public Offering: Early Planning Considerations [AE] #39. The Joys of an ESOP [AE] #41. Oiling the Hinges on Your Exit Strategy [AE] #42. Company for Sale by Owner – Or Maybe Not	Quiz #4 – Materials from Classes 8&9 New Venture Feasibility Assignment (written) due for all IBP teams
Exam Week 12/8/08 – 12/12/08	Quiz #5 to be given during scheduled exam time slot (Monday, December 8, regular class time) Section 1 (12:00) Schedule on 12/8/08: 12:00 – 12:25 Quiz #5 12:25 – 3:45 IBP Feasibility Presentations Section 2 (6:00) Schedule on 12/8/08: 6:00 – 6:25 Quiz #5 6:25 – 9:45 IBP Feasibility Presentations (1 or more teams may need to be scheduled during the remainder of exam week)	Quiz #5 – Materials from Class 10 Presentation of New Venture Feasibility Assignment by IBP teams