When education works best, both the teacher and the student learn. That is what is happening in my Venture Capital Law class this week. This evening, I taught my students how a VC fund prospects for investments, does due diligence on potential investments, and negotiates a term sheet. My students taught me about how entrepreneurial groups found companies and raise money in South Korea. I found it quite enlightening.
In South Korea, the industry of venture capital does not really exist. There are corporate investment offices in most, if not all, of the huge Korean corporations (Samsung, LG, etc.), but no professional investors in start-up companies similar to VC funds. Instead, banks and insurance companies finance promising new companies – usually with loans rather than equity funding. Since the banks and insurance companies want to see real operations, the financing needed to get a company to that stage must come from what we would call “friends and family” in the US.
As entrepreneurial activity grows in Korea, I expect that a vibrant venture capital community will grow – many entrepreneurs and investors here in Silicon Valley have connections with Korea. Where they see an opportunity to make money by investing in Korean entrepreneurs, they will do so.
I am even more interested in the difference twenty-four hours made in my students. Yesterday, most of the students had recently arrived in the US and they suffered from jet lag. Today, they were awake, sharp, and curious – participating and asking many questions. That makes it harder for me as a teacher – I need to be reacting to their questions and figure out what they are really asking (as opposed to the specific questions asked) – but it is so much more intellectually satisfying than simply giving a three-hour speech.
I’m looking forward to tomorrow, and I know that I’ll be disappointed to be done when tomorrow’s class ends.