Class 7, March 4th Writing contracts Gompers, P.

., Contracting and Control in Venture Capital [available at HBS course page] Walnut Venture Associates (A) case [available at HBS course page]

Readings:

Case:

Topic: Optional:

Deal terms Kaplan, S. & P. Stromberg, Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts Available at: http://www.sifr.org/PDFs/kaplanstromberg(res2003).pdf

Guest speakers:

Peter van der Velden, Managing General Partner, Lumira Capital

Assignment questions: 1. Evaluate the potential investment in RBS from Walnuts point of view. 2. As a Walnut investor, what critical issues do you see as requiring more investigation/due diligence on your part prior to investing, and how would you accomplish that? What level of comfort/certainty would you need to have prior to investing? 3. As Bob OConnor, what issues/concerns do you have relative to Walnuts investing in your business, and how would you resolve those issues? Note: Given the time constraint for the Walnut case, I will run the Walnut half of the class primarily as a lecture/discussion rather than as a case discussion.