International Journal of Business and Social Science Vol. 6, No. 5; May 2015 97 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 IQS Univ. RamonLlull. Via Augusta, 390 08017 Barcelona Spain 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. Keywords: Entrepreneurial finance; fund-raising; firm valuation; ownership percentage; entrepreneurship education; simulation; negotiation; role-playing 1. Introduction Some concepts, phenomena, and dynamics are complex and difficult to understand using traditional teaching methods, such as lecturing. Today’s professors have to increase students’ motivation and engagement, and have to think of activities to make students be involved. In contrast, current state of technology allows the existence of a wide range of interactive tools to bring to class. Simulations and role-playings are used to emphasize the concepts taught in class using traditional methods. 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). Increased knowledge was measured by comparing the results of a post-test with the results of a pre-test and by verifying whether students score higher in the post-test than in the pre-test. It was also measured by analyzing the negotiation agreements to assess any progress in students’ negotiation efficiency. Student learning perception was measured by a feedback survey. Everything is done with the aim of improving the learning of future cohorts of students.