Entrepreneurial Finance [Hardcover]

Richard L. Smith (Author), Janet Kiholm Smith (Author)

Book Description

ISBN-10: 0471322873 | ISBN-13: 978-0471322870 | Publication Date: February 2, 2000 | Edition: 1

Let Financial Economic Foundations Guide You in Your Decision Making! Providing unique insight, this is the first text to apply current financial economics research and theory to the study of entrepreneurship and new venture finance. This approach will help you use financial economic foundations as a framework to guide you in your decision-making process. You'll learn to think of new ventures as portfolios of real options, value financial claims of the entrepreneur and venture capital investors, and structure financial contracts in light of new venture information problems. And with the help of real-world examples, you'll gain a better understanding of the broad range of situations and problems that you'll likely face as an entrepreneur. Key Features
* The importance of strategy in new venture planning is stressed to help you develop a successful business plan for a new venture.
* A valuation perspective is used to describe topics such as strategic planning, business planning, financial modeling, assessing financing needs, raising outside financing, structuring financial contracts with investors, and harvesting.
* Relevant examples are integrated throughout the text to provide a real-world perspective. Also discussed is the fact that entrepreneurs and outside investors have different expectations for performance of a venture, and different requirements for a return on investment.
* Spreadsheet modeling and simulations using custom software are used to enhance learning.
Get Interactive! The book's Web site contains valuable resources including:
* PowerPoint presentations
* Active Excel spreadsheets
* Venture.SIM-a simulation software program
* Tutorials on how to use the software
* Extensive links to other sites and much more!

Editorial Reviews

From the Back Cover

Let Financial Economic Foundations Guide You in Your Decision Making! Providing unique insight, this is the first text to apply current financial economics research and theory to the study of entrepreneurship and new venture finance. This approach will help you use financial economic foundations as a framework to guide you in your decision-making process. You'll learn to think of new ventures as portfolios of real options, value financial claims of the entrepreneur and venture capital investors, and structure financial contracts in light of new venture information problems. And with the help of real-world examples, you'll gain a better understanding of the broad range of situations and problems that you'll likely face as an entrepreneur. Key Features
* The importance of strategy in new venture planning is stressed to help you develop a successful business plan for a new venture.
* A valuation perspective is used to describe topics such as strategic planning, business planning, financial modeling, assessing financing needs, raising outside financing, structuring financial contracts with investors, and harvesting.
* Relevant examples are integrated throughout the text to provide a real-world perspective. Also discussed is the fact that entrepreneurs and outside investors have different expectations for performance of a venture, and different requirements for a return on investment.
* Spreadsheet modeling and simulations using custom software are used to enhance learning.
Get Interactive! The book's Web site contains valuable resources including:
* PowerPoint presentations
* Active Excel spreadsheets
* Venture.SIM-a simulation software program
* Tutorials on how to use the software
* Extensive links to other sites and much more!

About the Author

Richard Smith is Professor of Financial Management at the Peter F. Drucker Graduate School of Management, Claremont Graduate University, where he teaches courses on new venture finance, and corporate financial policy and strategy. He is also Director of the Venture Finance Institute at Claremont. Professor Smith has served on several boards that are responsible for investing on behalf of pension funds and university endorsements, and has consulted extensively on matters involving investment, valuation, financial contracting, securities litigation, and antitrust.

Janet Kiholm Smith is Professor of Economics and Chair of the Department of Economics at Claremont McKenna College, where she teaches courses on the economics of strategy and industrial organization. She currently serves on the College's investment committee and consults on matters related to working capital management, the economics of contracts, and antitrust. She is the author of numerous journals articles, including publications in Journal of Legal Studies, Journal of Finance, Journal of Corporate Finance, Journal of Law and Economics, and Journal of Law, Economics and Organization.

Product Details

• Hardcover: 638 pages
• Publisher: Wiley; 1 edition (February 2, 2000)
• Language: English
• ISBN-10: 0471322873
• ISBN-13: 978-0471322870
• Product Dimensions: 9.6 x 7.9 x 1.2 inches
• Shipping Weight: 2.8 pounds
• Average Customer Review: 4.3 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #1,859,992 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Customer Reviews

Most Helpful Customer Reviews

13 of 16 people found the following review helpful:

2.0 out of 5 stars A Major Disappointment, July 12, 2003

By 

A Graduate Student (USA) - See all my reviews

This review is from: Entrepreneurial Finance (Hardcover)

The first edition of this text has a tendency to get too theoretical with betas and CAPM as they apply to private companies, make too many distinctions between individual and personal required rates of return without a discussion of any empirical data to back up the opinions, not explain the implications of the SML theory to private investments that well, not fully explain the theory and computations behind the models they use or why they use escalating discount rates in the models. To try to understand the models, you have to go to the web site and dissect the Excel spreadsheet. I have the impression the authors bring no practical experience to the text, only the attempt to force complicated corporate financial theory into the realm of privately held business.

As a business appraiser, I found most of the quantitative theoretical information useless and its application to privately held businesses tenuous, at best. Alternative theories and approaches were not really discussed. The concepts of expected value and simulation have some real good application possibilities, but not much time was spent on how to do it in a way usable for small entities with limited budgets and a staff with basically no statistical background. I feel that the authors' agenda was to impress the readers with what they know (or think they know), without regard to conveying their ideas in an easily understood, supportable and workable format. I found chapters 8-11 to be especially frustrating. To top it all off, there are also errors in the answers to the end of chapter questions.

On the positive side, the book was well organized and there were references to studies, papers and other texts that make further reading and investigation into the topics easier.

10 of 12 people found the following review helpful:

4.0 out of 5 stars Good textbook structure - mediocre quality of online section, July 8, 2001

By 

Adrian P. Kalt (Zurich Switzerland) - See all my reviews

This review is from: Entrepreneurial Finance (Hardcover)

The book has a good structure and has good chances to become a standard textbook in MBA classes or for industry newcomers. However, to make it a real classic it badly needs a second edition. First, there are too few (good) case examples. Second, the online tools are far from complete (something like this should never be published!). Third, the exercises need revising and are partly inconsistent or reptitive. (Comments based on online tools and materials as of June '01)

13 of 17 people found the following review helpful:

5.0 out of 5 stars The rational of financial economics and venture financing, November 29, 2000

By 

Atulesh Kaushik (Silicon Valley) - See all my reviews

This review is from: Entrepreneurial Finance (Hardcover)

In this book the authors have blended business finance and economics in a unique way to help entrepreneurs understand the relationship between venture finance and evaluation of business risk. This book covers some important issues like financial projections, risk evaluation, financial valuation, investor diversification and contract negotiation. This book provides a framework for financial management using complex economic theories (ex. portfolio theory, capital asset pricing model) through simple and user friendly spreadsheet templates. The valuation framework with spreadsheet templates is one of the highlighting factors of this book. The valuation templates with their underlying assumptions help reduce the ambiguity that palgues venture financing today. This book comes with an access to Entrepreneurial Finance website where authors walk the readers through spreadsheet templates and sample business cases evaluated by them in the book. This book is a must buy for entrepreneurs, aspiring entrepreneurs, venture capitalists and academics.