Exploring Entrepreneurial Finance and Venture Capital

Exploring Entrepreneurial Finance and Venture Capital

As I progress through graduate studies in the Master of Science in Law program at Northwestern’s law school, the strong culture of entrepreneurship and the continued generosity of the entrepreneurship community is something that consistently stands out to me.

I was recently reminded of the significance of this special culture when I stumbled across my class notes from the Entrepreneurial Finance and Venture Capital class I took during the last Power Week.

The Venture Pathway

Looking back on the class I took in December 2019, I was happy to remember how the class de-mystified the “The Venture Pathway,” the route an entrepreneur encounters throughout a business’s lifecycle. As my notes make clear, there are many personalities, business decisions, critical junctures, and even some algebra to consider along this pathway.

One example we considered demonstrated that the Initial Public Offering or “IPO” is just another round in the process of a series of rounds. We also learned to understand and deal with various nuances and twists along the venture pathway.

Inside the Board Meeting

Taught by Professors Esther Barron and Darren Green, the class required its students to work through a series of challenges and decisions that the entrepreneur is likely to face.

In mock scenarios, the Professors assigned students to a variety of stakeholder positions – such as entrepreneurs, board members, and investors – to explore interpersonal dynamics, ethics, and legalities of how various interests may compete.

Considering that the majority of startups fail, it was fitting that one of the most educational scenarios was a board meeting where the founders faced off against the VC’s board members. The conflict in this scenario pitted the decision to fund the next round against the decision to cut losses and terminate the business.

Empathy and Relationships

Depending on how each student advocated for their assigned role, some faced total loss, some faced additional risk, and some faced the recoupment of their initial investment. Putting ourselves in the positions of each of these actors and seeing the relational dynamics was an incredibly valuable exercise in empathy.

Learning from Failure – Preparing for Success 

Although we all hope for wild success, learning to deal with the worst-case scenarios will increase our level of preparedness.  For any of my fellow classmates who might face a term sheet in the future, I hope and expect that their new understanding of the business of venture capital will make all the difference.

Our Generous Community

Lastly, and on behalf of my fellow classmates, a special thanks to our guest speakers, Julian Cheng from Gen 1 Capital and David Vandergrift from 4Degrees. Julian and David were incredibly generous with their time in sharing their experiences and insights in entrepreneurship and venture capital.

Justin Chae, MSL ’20

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