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New Entrepreneurial Finance Book


New Entrepreneurial Finance Book

Book co-written by UC Riverside professor Richard L. Smith tackles topics including venture capital and initial public offerings

(March 31, 2011)

Richard L. SmithEnlarge

Richard L. Smith

RIVERSIDE, Calif. (www.ucr.edu) --As the economy shows signs of recovery and the venture capital and initial public offering markets heat up, a professor of finance at the University of California, Riverside has co-written a new book on entrepreneurial finance.

Richard L. Smith
co-wrote “Entrepreneurial Finance: Strategy, Valuation, and Deal Structure,” with Janet Kiholm Smith, a professor of economics at Claremont McKenna College and Richard T. Bliss, an associate professor of finance at Babson College. It was published last week by Stanford University Press.

The book applies the theory and methods of finance and economics to the rapidly evolving field of entrepreneurial finance. This approach reveals how entrepreneurs, venture capitalists, and outside investors can rely on academic foundations as a framework for decision making.

“All the recent news about venture capital and initial public offerings really shows how relevant and important this book is,” said Richard L. Smith, who researches the international spread of venture capital, exit choices for venture-backed firms and luck versus skill among venture capitalists.

The book, which builds on “Entrepreneurial Finance,” a book Smith and Smith wrote in 2003, is being released at a time when venture capital and initial public offerings are consistently in the headlines.

In December, Groupon turned down a $6 billion offer from Google. Recent reports now say Groupon has held talks with banks about an initial public offering that would value the company at $25 billion. Meanwhile, there is constant speculation about initial public offering from companies such as Facebook and Twitter.

In February, Daily Finance, an AOL Money and Finance site, reported that venture capitalists poured $21.8 billion into private companies in 2010, a 19 percent increase from the year before, according to the MoneyTree Report from the National Venture Capital Association and PricewaterhouseCoopers.

The report also found the number of deals jumped 12 percent to 3,277. The double-digit increase marked the first time the annual investment level increased since 2007.

Meanwhile, there were 72 initial public offerings in 2010, a jump from 12 in 2009 and 6 in 2008, according to the National Venture Capital Association.

The book by Smith, Smith and Bliss gives readers a unique and direct focus on value creation as the objective of each strategic and financial choice that an entrepreneur or investor makes. The authors address the influences of risk and uncertainty on new venture success, devoting substantial attention to methods of financial modeling and contract design. Finally, the authors provide a comprehensive survey of approaches to new venture valuation, with an emphasis on applications.

To bring the book to life, simulation exercises appear throughout the text. The authors also provide interactive cases that correspond with the book chapters and suggestions for published cases. And, the book is organized to complement the development of a business plan for those who wish to create one as they read along.

For more details about the book visit: www.sup.org/book.cgi?id=18738

The University of California, Riverside (www.ucr.edu) is a doctoral research university, a living laboratory for groundbreaking exploration of issues critical to Inland Southern California, the state and communities around the world. Reflecting California's diverse culture, UCR's enrollment has exceeded 21,000 students. The campus opened a medical school in 2013 and has reached the heart of the Coachella Valley by way of the UCR Palm Desert Center. The campus has an annual statewide economic impact of more than $1 billion.

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