Entrepreneurial Finance and Law

Module guide 2016 - 2017

AMSIB
 Author(s) Johan Kloosterman, Sven Carlin (Finance);
Anne-Sophie Andela (Learning Line Coordinator Law - Senior Lecturer IBS)

Programme John Sterk Director IBMS and TMA

Managers Wil Hazelhof Director IBL

Module ID 6010EFL

Academic Year 2016 - 2017

ECTS 5 (Finance: 3,5; Law: 1,5)

Contact hours 27 (Finance); 12 (Law)

Course site https://dlwo.dem.hva.nl

International Business School 2016 - 2017

Contents

1. Module overview 4
1.1 Content .............................................................................................................. 4
1.2 Learning goals.................................................................................................... 5
1.3 Coherence with other modules ......................................................................... 5
1.4 Study materials & recommended further reading ............................................ 6
1.5 Questions and who to contact .......................................................................... 7

2. Set-up of this module 8

2.1 Teaching methodology ...................................................................................... 8
2.2 Assignments ...................................................................................................... 9
2.3 Exams............................................................................................................... 10
2.4 Assessment ...................................................................................................... 10
2.5 Resit ................................................................................................................. 11
2.6 General regulations ......................................................................................... 11
2.7 Lesson plan ...................................................................................................... 11

Appendix 1: Relationship with your programme’s profile competencies 13

Appendix 2: Assessment model(s) 14

International Business School 2016 - 2017

1. Module overview
This guide gives you an overview of Entrepreneurial Finance and Law. More detailed information can
be found on the Digital Learning Environment DLWO (https://dlwo.dem.hva.nl)

1.1 Content

Entrepreneurs are people with ideas and one of the biggest challenges entrepreneurs face are the
finances and rules related to developing those ideas.

Finance includes various abstract concepts, such as

- the time value of money;
- business valuation;
- return on investments;
- value creation;
- trade-off between ownership and growth etc.

In this module you will learn how to set up and develop your business financially and how to avoid
the most common financial pitfalls in entrepreneurship. On the other hand, you will also learn what
is the best way to finance your business in order to grow as much as possible without relinquishing
too much ownership. And why!

To prepare you for the challenges of business practice, this module also offers legal theory,
application and insight and encourages you to critically appraise and debate legal and
entrepreneurial issues in the wider social context.

Law exists to regulate behaviour, to avoid conflicts and to provide solutions. It is an indispensable
instrument in a entrepreneur's toolkit. Law in business is risk management. The law part of this
module focuses on the hands-on use of law in an entrepreneurial context. It equips you with the
legal insight and knowledge to make sound business decisions. Provides “do’s and dont’s” to
strengthen your legal position in negotiations. And empowers you to use the opportunities the law
affords whilst avoiding the pitfalls.

Topics include:
- preparation of the proper ethical and legal foundation;
- how to choose and deal with an attorney;
- how to avoid litigation;
- the appropriate business form to use (partnership, Ltd., GmbH, PLC, SA de CV) taking into account
risk, control and profitability;
- which intellectual property rights to use in a given situation;
- legal aspects of strategies for firm growth such as acquisition, licensing and joint venture;
- advantages and disadvantages of franchising.

The solid understanding of entrepreneurial finance and law will help you make better decisions.

International Business School 2016 - 2017

1.2 Learning goals

# You can:

1. Recommend the best investment and financing option for a new venture
2. Forecast financial outcomes in uncertain environments
3. Assess the financial needs of a new venture
4. Create a valuation model for your venture with the highest harvesting potential
5. Produce a coherent and convincing financial plan for a new venture

6. Identify which is the appropriate business form in a given situation;

7. Identify which intellectual property right to apply in a given situation;
Make an informed choice between firm growth strategies such as licensing, joint venture, acquisition or
8.
franchising based on legal aspects
Interrelate the legal aspects of doing business both internally (to e.g. sales, marketing, finance, HRM
9. and general corporate, economic and managerial considerations) and externally (to current and ethical
issues).

Appendix 1 defines the relationship of the learning goals within this module with your programme’s profile
competencies.

1.3 Coherence with other modules

Entrepreneurial Finance and Law are essential for any new venture. This makes the module
Entrepreneurial Finance and Law a perfect match for the Entrepreneurship minor as it provides the
necessary basics and understanding that enable you to follow the related modules.
Entrepreneurial Finance and Law will make you understand the decision-making process better.
It will help you assess different financial and legal perspectives when analysing cases in the module
Cases in Entrepreneurship, give a strong numeric validation to the development of your business
idea in the Entrepreneurship module, enable you to critically and financially assess the innovation
developments in the Managing Entrepreneurship and Innovation module and give you the edge in
negotiations and add profit to the sales in the Sales and Negotiations module.
Special attention will be given to the relationship between law and ethics in international business.

The knowledge and skills gained in this course are categorized under the areas of international
business awareness, human resources management and ethical responsibility. They are an absolute
necessity for anyone operating in the international business arena in the professional role of advisor
for which IBMS prepares its students.

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1.4 Study materials & recommended further reading

Required study materials:

Study books
Title Author(s) Publisher Year Edition ISBN
Smith, J.K., Smith, R.L., Stanford 2011 978-0-8047-
Entrepreneurial Finance Bliss, R.T. Economics 7091-0
and Finance
Entrepreneurship Bruce R. Barringer, R. Pearson 2010 4th or 978-0-13-
Successfully launching new Duane Ireland Education latest 255552-4
ventures Limited

Other study materials

Title Author(s) Where to find this material?
The Dynamics of Ethan R. Mollick Journal of Business Venturing, Volume 29, Issue
Crowdfunding, an exploratory 1, January 2014, pages 1-16.
study
Entrepreneurial finance Sven Carlin Hva.nl
research lab - publications
Legal aspects of doing business Loyens & Loeff On the internet
in the Netherlands
Doing business in the PWC On the internet
Netherlands
Course materials, other Anne-Sophie Andela, On DLWO and the internet
documentation various
E-syllabus International Anne-Sophie Andela DLWO
Legislation

Recommended further reading:

Books
Title Author(s) Publisher Year Edition ISBN
Schmitthoff’s The law and Carole Murray, Sweet & 2012 12th or 978-0-414-
practice of international trade Daivid Holloway and Maxwell latest 04607-8
International Trade Law Daren Timson-Hunt

EU Law
Paul Craig and Oxford 2011 5th or 978-0-19-
Gráinne de Búrca University latest 957699-9
Text, Cases and Materials
Press

Understanding European
Karen Davies Routledge 2013 5th or 978-0-415-
Taylor and latest 69903-7
Union Law
Francis Group
Ray August, Don Pearson 2013 6th or 978- 0-
International Business Law Mayer, Michael Bixby Education latest 273-76861-
8
International Business School 2016 - 2017
1.5 Questions and who to contact

Questions about the module’s content and study materials can be addressed to your lecturer(s) during
the lessons. General questions about the set-up of this module can be asked in the module’s
discussion forum on the DLWO. Please, check first if your question has not already been posted,
otherwise it will not be answered. They will be answered within 5 working days by the module’s
coordinator. The consultation hours of the individual lecturers as well as their office location can be
found in the lecturers’ profile on the DLWO.

International Business School 2016 - 2017

2. Set-up of this module
2.1 Teaching methodology

The in-class teaching on finance will mostly consist of case analysis, discussions and the explanation
of entrepreneurial financial concepts. As the classes are on a level where the student is expected to
be prepared it is required to read the book chapters related to the specific class prior to the start of
class and also to strictly follow the complete Entrepreneurship Minor structure as most of the cases,
examples and concepts will be related to the start-up phases of the Minor’s general project.

During the in-class teaching on law you will integrate, expand and reflect on your knowledge on how
law and ethics relate to current practices and trends in business through a group assignment, which
includes presentations, interactive discussions on case law. Emphasis is placed on exploring,
interpreting and evaluating business issues from a legal and ethical perspective.

We will meet once a week over a period of four weeks in a three-hour (block) session. Class time will
be partly student-led (flipped classroom). The approach is interactive. Active class participation is
expected. You will work in small groups to prepare a multi-faceted assignment together, cooperating
and benefiting from the diversity in background and preference available. This is activating and time-
on-task. You are requested to go in depth and generate your own materials.

You will be required to research an assigned legal topic, chart it and present your findings.
Alternatively, you will prepare a (case) presentation and lead a discussion in class on its merits, the
legal difficulties of the particular dispute and the relationship with other entrepreneurial or societal
considerations. Typically, a case presentation is a hands-on exercise, in which you learn to defend a
case and propose (alternative) solutions to the conflict.

Case law serves to illustrate and support the theory set out and will be actively discussed. These legal
analyses are essential to help train in (legal) problem solving and understanding the role of legal
preventive thinking and acting as an aspect of risk management.

A session will typically consist of:

1. an introduction where current issues are discussed drawing on your pre-existing knowledge;
2. a lecture part in which legal concepts and theory are explained and put into context AND/OR a
student-led section with a (choice of) Powerpoint presentation, quiz, discussion, (mini-) guest
lecture on a previously assigned topic or case followed by feedback and a class discussion;
3. OR an alternative session, which could be a field trip or a guest lecture from a renowned expert
or one of our alumni.

Attendance is essential to get a good grip on the material and acquire a helicopter view of the diverse
and intricate legal ins and outs of doing business.

Any and all topics and materials used, presented and discussed in class will contribute to reaching the
set learning objectives.

The materials used for the law sessions will consist of selected chapters from the Entrepreneurship,
Successfully launching new ventures used in the Minor, tailor-made powerpoints and assignments.
Additional materials, such as You Tube, TED talks and MOOC lectures from Berkeley, Harvard and Yale
professors and information to be found on various websites may also be used, either in class or as part
of an assignment. Movies or investigative journalism documentaries on various topics from various
sources, news bulletins, newspaper articles, political documents, philosophical or academic articles
may form part of the material used to provide depth and breadth.

International Business School 2016 - 2017

2.2 Assignments

The Entrepreneurial Finance and Law project consists of creating a financial plan for a new business
venture, or financial projections of a new business idea to be developed by an existing organization.
The financial project covers learning goals 4 and 5 of the module.

The report consists of the following parts:

1. Financial plan (REALISTIC SCENARIO) for the business venture, consisting of:
1.1 The revenue or earnings model.
1.2 A realistic estimation of revenues expected in the first 3 years of the business venture. Note: if a
business venture can be expected to take more than 3 years to reach a stable growth path, the time
horizon should be expanded until a stable growth path can be expected.
1.3 A realistic Expenses and Investment plan; following the same timeline as the revenue plan.
1.4 Projected income statement, cash flow statement and balance sheet for the planning period.
1.5 Explicit choice and forecast of expected level of returns to investors.
1.6 Inclusion of 4 rounds of financing with 4 different methods (debt, VC, IPO...) with a clear
ownership structure and business valuation before and after the new financing.

Notes:
1. Templates
* A basic format for financial statements will be provided. The teams may adjust these formats as
needed in order to enhance the insight to investors regarding their business plan.
* The team will explain the reasoning behind their plan in text format.
2. Choice of Company LEGAL STRUCTURE and FINANCIAL STRUCTURE.
The report will explain the choice for the legal structure as well as the desired financial structure
(ratio of owners’ equity versus external financing). In this section, the team should explain these
choices based on advantages and disadvantages of the various possibilities.
3. Explanation of working capital, long-term capital invested and other key financial ratios.
The report will present and explain the choices for key ratios regarding:
* Working capital (receivables, Inventory, payables and cash levels)
* Investments in long-term assets and choice of financing instruments for these.
* Any other items that require explanation. (check with teacher in case of doubt).

DUE DATE
The report and presentations of the financial plan are due in week 11 of the course. It is however
possible and advisable to submit the report earlier so that the team can receive feedback before the
final presentation. It is possible to submit the report earlier but not after week 9.

GRADING
The report will be graded based on the following criteria:
1: Alignment of financial plan with the business strategy with incorporated entrepreneurial finance
concepts.
2: Internal consistency of financial statements.
3: Correctness of financial statements.
4: Realism in revenue and cost projections.
5: Overall credibility of the report (will this convince external investors).
6: Presentation: is the report well laid out and clear, concise and easy to follow? Is the presentation
convincing?
7: Capacity of the students to think big. It is expected that after 5 years the company will be valued at
least at $10,000,000.

International Business School 2016 - 2017

Law Assignment – 30% of total grade for Entrepreneurial Finance and Law

The law assignment covers all the law learning goals. A maximum of six project-groups will be
formed. Each group will prepare a multi-faceted assignment to be shared and presented in class.
.
• Participation in class, incl. peer assessment in the assignment will be taken into account when
finalizing the grade.

The assignments will be made available on DLWO. Details of group presentations (such as which
groups present when and on which case or documentary) will be dealt with in class after the groups
have been formed.

In your group, you are all responsible for the end result.
You should choose a project leader to communicate with the lecturer.
Assignments have to be handed in by the project group leader in hard-copy AND on DLWO at the
designated time and place.
Free-riding is not allowed.
All group work will be explained and discussed in class.

You will need to be present in all lectures/scheduled class time in order to receive instructions, present,
ask questions, give feedback and obtain a helicopter view.

Your individual grade might be affected by peer assessment and class participation, which includes
attendance (please consult Appendix 2 for the assessment models).

You are expected to carefully peruse and follow the schedule. You can find the assignments on DLWO
in full detail. If there is a discrepancy or unexpected changes take place, the instructions as given in
class will take precendence over those in the schedule.

N.B. No minimum grade is required, but the overall average grade should be at least 5.5 (see also
below under §2.5 resit).

The assessment model(s) for the assignment(s) can be found in Appendix 2.

2.3 Exams

The written Entrepreneurial finance exam covers learning goals 1,2 and 3 of the module. The
materials to be studied are available on the module’s web site in the form of lecture presentations
and the study materials mentioned under 1.4. You have 2 hours to successfully finish the exam.
The content covered in the exam and the methodology used will be explained in class.
An HvA calculator will be provided to you at the exam. Please use the same or a similar
scientific calculator when you practice.

2.4 Assessment

The assessment methods used in this module are summarised below. The table also shows how the
grade for this module will be calculated.

International Business School 2016 - 2017

 Learning
# Description Form goal(s) # Lecture week Weight (%)

1 EFL assignment - Law Assignment 6,7,8,9 At end of law sessions 30%

2 EFL exam - Finance Written exam 1,2,3,4,5 After completion of all lectures 70%
3
4
5
6

100%

2.5 Resit

If the average grade obtained for this module is below 5.5 you must do a resit. Which resit(s) you must
do depends on which part(s) is/were insufficient. The different situations are illustrated in the table
below.

Situation: The resit will consist Your average module The resit(s)
of the following grade after resit will be will be
test(s): calculated using the scheduled
following weights: in:

1 • Average grade for the whole module ≥ 5.5 No resit needed N.A. N.A.

2 • Average grade for the whole module < 5.5 S1H, S2H

2.6 General regulations

1 You are required to prepare for lessons. If you come to class unprepared, the lecturer has the right
to deny you access to the lesson. What is requested of you in terms of lesson preparation is stated
below and/ or on the DLWO for this module.

2 You must bring a laptop to school for each class. It is your responsibility to make sure that the
battery lasts throughout each lesson. If you fail to bring a laptop to class and/or if the battery does
not last throughout class, this is regarded as not being prepared. A lecturer then has the right to
deny you (further) access to that lesson.
3 The assignments will not be graded if the level of English is inadequate. If that is the case, you have
to hand in your assignment again in the appointed resit period.

2.7 Lesson plan

The students are required to prepare for every lesson by reading the below mentioned chapters from
the Entrepreneurial Finance or Successfully launching new ventures book and to be up to date with
their entrepreneurship project in order to fully grasp the insight given in the finance classes.

International Business School 2016 - 2017

 Lecture week Prepare for lesson 1 Lesson 1 Activities Number of pages

1 Finance Read Chapter 1 and 2 Chapters 1 and 2 Half an hour of each second 77
(Smith, Smith lesson is planned for
& Bliss 2011) coaching for the financial
part of your business plan.
2 Read Crowdfunding article Crowdfunding 16
3 Read Chapter 3 Chapter 3 40
4 Read Chapter 4 Chapter 4 45
5 Read Chapter 6 and 8 Chapters 6 and 8 70
6 Read Chapter 9, 10 Chapter 9 and 10 70
7 Read Chapter 14 Chapter 14 30

8 Read Chapter 15 Chapter 15 40

9 Law Read chapter 7 (p. 213 - Ethical and legal 38
(Barringer & 248) foundations
Ireland
2010)
10 Read chapter 12 (p.393 - Intellectual 37
430) Property
11 Read chapter 14 (p. 461 – Legal aspects of firm 32
493) growth
12 Read chapter 15 (p. 495 - Franchising 38
533)

International Business School 2016 - 2017

Appendix 1: Relationship with your programme’s profile
competencies

LG You can:

1. Recommend the best investment and financing option for a new venture
2. Forecast financial outcomes in uncertain environments
3. Assess the financial needs of a new venture
4. Create a valuation model for your venture with the highest harvesting potential
5. Produce a coherent and convincing financial plan for a new venture
6. Identify which is the appropriate business form in a given situation;
7. Identify which intellectual property right to apply in a given situation;
Make an informed choice between firm growth strategies such as licensing, joint venture, acquisition or franchising
8.
based on legal aspects
Interrelate the legal aspects of doing business both internally (to e.g. sales, marketing, finance, HRM and general
9.
corporate, economic and managerial considerations) and externally (to current and ethical issues).

LG IBMS Profile Competencies

International business awareness – through learning goal (LG) 1 develop and fine tune the ability to outline,
evaluate and create financing options in different international environments; - through learning goals (LG)
1. 6-9 develop the ability to choose the appropriate business form or intellectual property right in a given
situation, to make an informed choice between firm growth strategies and to interrelate legal aspects of
doing business with internal and external considerations.
Business Processes & change management – LG 2 enhances the ability to make decisions in an uncertain
2.
environment like entrepreneurship
Entrepreneurial Management – LG 3 is essential for any entrepreneur, knowing the best level of cash is
3.
crucial for entrepreneurial success
4. International Finance and accounting – Entrepreneurship is creating value, finance is getting paid for it
Business Communication – LG 5 – The ability to clearly communicate and elaborate financial concepts is
5.
essential

International Business School 2016 - 2017

Appendix 2: Assessment model(s)

Assignment - Finance:

The student will be assessed by using the following rubric.

CRITERIA & GRADE Score Comments

WEIGHT
10-8: outstanding to 7-6: reasonable to
5-1: fail
good passable
Introduction The introduction The introduction The introduction does
provides a clear provides a brief not provide a clear
(10%) situational background, situational background situational background
the reason for the and questions to be and only obvious case
report, and questions to answered in the case. questions are
be answered in the case. mentioned.

Body Plan application based Plan application based Plan application based
on the theory discussed on the theory discussed on assumptions which
(60%) in the textbook, but also in the textbook. are not based on any
with the help of other Assumptions have been theory discussed in the
sources. made based only on the textbook, nor any other
Assumptions have been theory discussed in the credible source.
made based on credible textbook.
sources.

Conclusion Clear answers to Clear but brief answers Answers have been
(30%) questions have been to the questions have provided that lack a
provided, based on been provided. logical argumentation
logical and valid and that are not based
argumentation. on a proper analysis of
the case.
English* The assignment is written in clear, concise and correct Business English
Prerequisite
Layout & According to the IBS guidelines described in the document ‘Reporting -
Style* Guidelines for writing and styling business reports’
Prerequisite
Individual The student shows in the report, presentation and through peer assessment that
contribution# the individual contribution to the report is satisfactory.
* These criteria will not be graded, but if missing or incomplete, the assignment will be rejected.
# If the peer assessment form clearly shows that a student did not equally contribute to the report and is not able to defend his/her

contribution in the presentation his/her group grade for the assignment might be revoked.

International Business School 2016 - 2017

Appendix 1 – Grading matrix for legal assignment(s)

Criteria Unacceptable Acceptable Good Excellent Score Comments

<5.5 5.5 to 6.9 7.0 to 8.5 8.6 to 10
Written assignment(s)
Content and Answers do not Answers show Answers show In addition to carefully
organization meet basic adequate good logical crafted logic, answers
requirements. argumentation. argumentation are original and show
Analysis of the case Analysis is and are clearly creative thinking in
situation is superficial and outlined. Analysis approaching the case
inadequate. No based solely on shows depth, questions. The answers
application of the the video or news draws out the excel in organization
material from the article. On the relation between and presentation of
three themes. low end, insight the main points in ideas, or perhaps
Answers to from the reading the video, article, address other
questions are material (theory) case and and important
poorly focused and is poorly applied. theory. The issues/implications of
lack organization. On the high end, answer has the video, article,
insights may be insightful material. Excellent use
applied but conclusions. of theory.
superficially. Good use of
Generally, shows theory, although
limited perhaps with
application of mistakes in
theory. application.
Clarity and Writing is poor and Frequent errors in Some minor Very well written,
Mechanics answers contain writing, e.g. errors, but essentially error free.
many errors in spelling, generally well Writing style is smooth
spelling, grammar, grammar, written. Errors do and establishes a sound
and/or sentence sentence not interfere with argument. The reader
structure that make structure, which legibility or can easily follow the
following the logic interfere with comprehensibility writer’s logic.
of the answer comprehensibility .
extremely difficult. .
Answer does not Writing does not
meet the minimum flow smoothly
word count. from point to
point; lacks
appropriate
transitions.
References Includes no Limited use of Incorporates good Uses convincing
and support references or additional examples and examples to support
(only for supporting examples or use references from arguments and draws
essay) examples. No of irrelevant additional on relevant additional
bibliography. examples. Draws sources. sources.
on limited
additional
sources.

International Business School 2016 - 2017

 Presentation(s) and panel discussion(s)
Content Not prepared, Adequate Good Comprehensive, in-
and materials/PPT slides understanding of understanding of depth understanding of
preparation (if used/required) the material. the material. the material. Slides and
disorganized and Slides and Slides and materials (if
shows little to no materials (if materials (if used/required) support
understanding of the used/required) used/required) the presentation well
material. Not are minimally support the and group presented
presented within prepared. presentation well case well. Well
time. Did not Not presented and group organized and
adequately engage within time. presented case presented within time
the class in Led the class in well. Well limit. Led the class in
discussion. No group discussion organized and discussion exceptionally
effort visible. falteringly.Lack of presented within well. Showed
visible group time. Adequately exceptional synergy
dynamic. engaged the class and active group
in discussion. dynamic.
Showed group
dynamic.
Non-verbal Unprofessional, Professional, Professional, Professional, interested
communica uninterested attitude. interested interested and enthusiastic. Holds
tion Speaks unclearly, no attitude. May attitude with attention. Speaks
eye contact. seem nervous, some enthusiasm. clearly and articulately.
shy or Speaks clearly and Very good eye contact
unenthusiastic. projects voice; with the whole
Speaks clearly but has good English audience.
softly. May be pronunciation.
difficult to hear. Good eye contact
Some eye contact but may look at
but looks at screen
screen often. occasionally.
Question Shows difficulty in May not Understands Thorough
handling answering questions. understand question and understanding of
Acts defensively. No question entirely answers questions and makes
one in the group can but tries to adequately and accurate links to the
answer questions. answer and confidently. theory. Interacts with
defend position. Provides audience and
Only a few group additional encourages thoughtful
members able to argumentation debate. Defends
answer questions and defends position exceptionally
adequately. position well. well.

International Business School 2016 - 2017