Bringing Together the Venture Capitalist and the Entrepreneur: Management 804

By Will Mroz WG’15

In venture capital and entrepreneurship, you learn from experience and from others.  During MGMT 804: Venture Capital and Entrepreneurial Management with lecturer Henry Han, I was able to sharpen my investing skills through extensive in class discussions, a term sheet negotiation simulation, and enriching readings.  Though the class is only a quarter long, I was able to dig deep into valuation, deal structuring, term sheet mechanics, due diligence frameworks, and fund arrangement.

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One of the key benefits of MGMT 804 is the opportunity to learn not only from the lecturer but also from the diverse group of students that comprise the class.  The class demands a lot of collaboration in the various problem sets and end of quarter term sheet negotiation project.  Having prior experience in venture capital, one of the dangers that an investor can fall into is “groupthink”.  In MGMT 804, it was refreshing to hear the differing perspectives of aspiring entrepreneurs to better calibrate what I should be focusing on when investing.

For the end of course project, students were put into teams of four to negotiate a term sheet from either the perspective of a startup or a venture capital firm.  As I am always looking to improve my negotiating skills, it was fantastic to be teamed up with someone who was a bona fide expert in negotiation.  Through the use of technique and personality, he was able to attain favorable terms with regards to valuation and control for our startup.  Through the project, I was able to improve my negotiating skills by learning from him.

Aside from learning about the art of venture capital, MGMT 804 also teaches the mechanics of early stage investing.  At times the course is as quantitatively rigorous as any finance class offered at Wharton.  Our class learned how to effectively value potential investments and discover the levers that effect overall returns.  Despite the basic pre-money and post-money valuation, mechanisms such as liquidation preferences, participation, anti-dilution provisions, and dividends have a huge effect on how much a fund or entrepreneur will ultimately make.

MGMT 804 brings the entrepreneur and the venture capitalist together for a mutual learning experience.  With both sides understanding the deal negotiation process, the focus can shift to value creation and growth rather than structuring to “outsmart” the other side.  MGMT 804 aims to arm both sides with knowledge in order to facilitate the success of early stage businesses and investors.  For any aspiring entrepreneur or early stage investor, this course is a must.

HeadshotBio: Will Mroz is currently a second year MBA student at the Wharton School.  Prior to Wharton and after graduating from MIT, he spent five years in venture capital, private equity, and investment banking.