Raising Funds: Entrepreneurs and Investors Negotiate an Amount to Invest and an Ownership Percentage
Antoni Olivé, Jordi Cuadros, Lucinio González-Sabaté, Vanessa Serrano, Xavier Jolonch

Abstract
This paper summarizes the results of an activity which consisted of two parts: 1) the calculation of the value of a new venture and the funds needed during its first years of operation (simulation) and 2) the negotiation between an entrepreneur and an investor of an amount to invest in the new venture in exchange for an ownership percentage (role-playing). The research consisted of verifying: 1) whether the activity increases students’ comprehension of the key concepts previously specified (increased knowledge) and 2) whether students’ attitude is receptive to innovative teaching methods (students’ attitude). The main conclusions of the research are: 1) students learnt; 2) students failed at realizing that forecasting the future free cash flows is the way to calculate the funds needed and the funds to be raised from investors; 3) some students did not comply with the negotiation rules; 4) students prioritized reporting agreements, regardless of their quality; 5) there is a significant number of agreements that were reached with a firm valuation inconsistent with the first part of the activity (simulation); 6) after having debriefed the first round, there is an improvement in the negotiation process of the second round (the negotiation consisted of two rounds); 7) the activity was well-accepted by the students; 8) some changes should be implemented in future uses of the activity.

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