Venture Capital and Private Equity

Course Number 1428

Senior Lecturer Jo Tango

Fall; Q1Q2; 3.0 credits
28 Sessions

Qualifies for Management Science Track Credit

Career Focus

Professor Josh Lerner started the Venture Capital and Private Equity (VCPE) course in 1996, and it today is one of the longest-running offerings in the second-year curriculum. The course targets students new to VCPE or those interested in the strategic issues that VCPE Managing Partners face.

Educational Objectives

Designed as a survey course, the curriculum examines the firm-wide managerial issues that VCPE investors encounter. This course complements Entrepreneurial Finance and Private Equity Finance; students seeking to develop deal-execution skills should prioritize those courses.

The cases are organized into three modules and will cover:

THE INVESTORS

PRIVATE EQUITY

VENTURE CAPITAL

VCPE’s potential positive impact on returns
The “Yale Model”
Asset allocation
Impact of fees and carried interest on returns
How to pick managers
The influence of Cambridge Associates

Ethics
Impact of fund size on returns
Bidding on a deal
Getting a deal through the Investment Committee
PE as part of a multi-asset platform
Debt holders vs. equity holders
Crisis management
Leveraged buy-outs
Mezzanine debt
Real Estate

Incentives that can lead to dysfunction
Compensation
Owners vs. partners
Starting a new firm
Succession
Term sheets
Lack of diversity
Selection criteria
Impact of hedge funds
Angels vs. seed funds vs. traditional VC
Early-stage vs. growth capital
When to sell an investment

Course Content

Class Sessions:

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

Accel (Andrei Brasoveanu)
Apax Digital (Marcelo Gigliani, Dan O’Keefe)
Bessemer Venture Partners (Mary D’Onofrio, Elliott Robinson, Janelle Teng)
Blackstone (Stephen Schwarzman)
Broadway Angels (Sonja Perkins)
CalSTRS (Margot Wirth)
Carlyle Group (Tanaka Maswoswe)
Centerbridge (Billy Rahm)
CPPI (Shane Feeney, John Graham, Nate Goulbourne, David Lubek, Deborah Orinda)
CRV (Jon Auerbach)
Founder Collective (Eric Paley)
IGNIA Partners (Álvaro Rodriguez)
Innova Capital (Andrzej Bartos and Krzysztof Kulig)
Interline (Mike Grebe and Ken Sweder)
Johnson Media (Kevin D. Johnson)
KKR (Raj Agrawal, Rob Lewin)
Lone Star (André Collin)
NextView (Rob Go)
Oaktree (Raj Makam)
Owl Capital (Jen Fonstad)
P2 Capital (Josh Paulson)
Pear VC (Keith Bender)
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)
Yale Investments Office (Amy Chivetta, David Swensen)
York Capital (Bill Vrattos)

Polls and a small-group discussion:

Many cases will have a quick poll. There will be a small-group discussion early in the semester for which a short, written reflection will be required. The polls and the discussions 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. The paper can be theoretical or a case-like one based on a specific company. Examples of papers are posted on Canvas. A small group of authors will present their findings to the class. Note: the paper will be due before Thanksgiving break.

Grading

Class participation 40%, polls and reflection 20%, final paper 40%. There will be no final exam.