Quarter 11 - Week 6

Coming back after a break seems to have caused a memory lapse when it came to classes. For some reason, there was very few actual readings for this week, so it was more like a two week vacation. Profs come in to class, see our vacant stares and go 'Good Lord, don't tell me we need to do a flashback to the events from a couple of weeks ago!'. It's a good thing they're able to do a 10-minute recap after which our vacant stares are more related to the high-frequency transmissions being broadcast rather than the connection/flow that we're supposed to be going through. In any case, it's time to buck up... the assignments and projects have begun to exert some pressure.

New Enterprise Financing

The prof quickly wraps up the Kakofonix case, and moves on to Marconi. Marconi's a lot simpler than all the other cases thus far. It talks of how founders expect to raise capital through multiple rounds from investors, and what percentage of share they're willing to part with. Once all of this is calculated, and when we see how dilution works out in advanced rounds, we begin to add some realism. It's like one of the investors asks a question after pondering for a while... 'But, what if we don't get our promised return. What if the valuation actually drops?'. Uh oh, go the other investors, we should think of that. A little huddle and argument later, they proudly come around and say that 'All right, if the price of the share goes down, then we get to have an anti-dilution clause, thereby protecting the final value that accrues to us'. So all of a sudden, the entrepreneur who's expecting to hold 55% of the company (as an example), ends up with just 6% (again, an example)... because to ensure that investors can exit at their target value, SOMEBODY has to give up share and it can't be other investors. Anyway, in this case, the terms also suggest that the valuation can go anywhere between 60% and 140% of the expected value, and that the founders dont want to go under 26% share, and investors don't want to get under 50%. So we look at all the extremes, to see how it pans out and what could be the ultimate value that all shareholders receive. We also looked at a view of approaching funding, and how entrepreneurs have a fundamental issue to figure out - do they want to create value or do they want to control the firm. Economics vs. control, the prof calls it, so we look at that aspect and see how anti-dilution, preference shares, call/put options, drag along/tag along options play a part in this whole shenanigan. Awesome stuff!

Reinvention through Entrepreneurial and Intrapreneurial Learning

The prof now moves away from the ownership and intrapreneurship module, and tries to help us get more onto the plane of self-knowledge and mastery. First off, he asks us to describe what we proudly hold dear as Indian, stuff we don't find elsewhere. So people give out stuff like charity, friendliness, tolerance etc. etc. lots of nice thingies that we think we're proud of. We're then made to sit through an hour long video that describes the predicament of farmers in rural India, we have a lot more people out there than in urban India, and we get a glimpse of how bad their situation is. We see example after example of what prompts people to commit suicide, and at the end of the session, we really wonder if we are of any use. Sitting in our own comfortable cocoons, we shut our eyes from everything bad. It's sad when we think that India's more known for its generosity, when we are shown evidence after evidence to the contrary. Shows just how little we know about what's happening here.

If that wasn't hard enough, the next session was a guest lecturer who speaks of how old age is a slowly approaching iceberg. The speaker talks of the increase in the number of separation cases of old folks from the family, the emergence of old age homes, and the intolerance shown by today's busy youth to their parents. We hear of examples where the elderly are 'forced' into grandparent-hood, just because the parents dont have time. And when the kids grow up, these very folk who helped settle them, the grandparents, are treated as useless pieces of furniture around the house... just obstacles that come in the way.

This week definitely shook me, with so many problems all around us, I count myself very fortunate that my issues are not as dire. I have the choice and freedom to attend classes at one of India's most prestigious institutions, to spend my time anyway I want, to talk to whoever I want to... how many others can claim the same? And yet, what am I doing with all these privileges...