2025/2026
Finance of Innovation
Type:
Mago-Lego
Delivered by:
Department of Educational Programmes
When:
4 module
Open to:
students of all HSE University campuses
Instructors:
Elena Ochirova
Language:
English
ECTS credits:
3
Contact hours:
32
Course Syllabus
Abstract
This course examines how innovation is financed, valued, and managed under conditions of high uncertainty. It contrasts innovation finance with traditional project finance, reviews major funding sources for innovative projects, and introduces market sizing, unit economics, and financial forecasting. Core valuation methods for innovation, such as discounted cash flow (DCF), stage-gate approaches, scenario-based valuation, real options, and portfolio analysis, are presented and applied to early-stage ventures and corporate innovation initiatives. Furthermore, financial analysis is linked to strategic decision-making, including the design of financing strategies, the management of innovation portfolios, and go/kill/scale decisions. Through cases, assignments, and a group project, students develop the ability to construct and interpret financial models for innovation, select appropriate valuation tools, and critically assess innovation finance decisions from multiple stakeholder perspectives.
Learning Objectives
- Explain how financing innovation differs from traditional project finance
- Identify and compare main funding sources for innovative projects at different stages
- Build and interpret basic financial models for innovation projects
- Design financing strategies that link funding instruments, valuation outcomes, and strategic priorities
Expected Learning Outcomes
- Knowledge of distinctive features of innovation finance compared to traditional project finance
- Knowledge of main sources of financing for innovative projects
- Knowledge of market sizing methods, unit economics, and financial forecasting in innovation projects
- Knowledge of valuation methods for innovative projects: DCF, stage-gate, scenario-based approaches, real options, and portfolio analysis
- Ability to construct basic financial models for innovation projects
- Ability to apply valuation methods to early-stage and corporate innovation projects under uncertainty
- Ability to evaluate corporate innovation portfolios
- Ability to design financing strategies for innovation projects, integrating funding sources, valuation, and strategic alignment
- Ability to critically assess innovation finance cases from the perspectives of entrepreneurs, investors, and policymakers
Course Contents
- Block I. Foundations of Innovation Finance
- Block II. Valuation Approaches for Innovation
- Block III. Strategic Financing and Decision-Making
Assessment Elements
- Homework 1 (HW 1)(Detailed instructions will be announced during the course) Across the course, students complete a sequence of individual homework assignments that build from fundamentals to full basic financial modeling of innovative project. The homework is structured and cumulative, designed to provide hands-on practice with the tools and techniques needed for the group assignment. Assignments must be submitted within the announced deadlines. Late submissions will be penalized according to the course policy.
- Homework 2 (HW 2)(Detailed instructions will be announced during the course) Across the course, students complete a sequence of individual homework assignments that build from fundamentals to full basic financial modeling of innovative project. The homework is structured and cumulative, designed to provide hands-on practice with the tools and techniques needed for the group assignment. Assignments must be submitted within the announced deadlines. Late submissions will be penalized according to the course policy.
- Homework 3 (HW 3)(Detailed instructions will be announced during the course) Across the course, students complete a sequence of individual homework assignments that build from fundamentals to full basic financial modeling of innovative project. The homework is structured and cumulative, designed to provide hands-on practice with the tools and techniques needed for the group assignment. Assignments must be submitted within the announced deadlines. Late submissions will be penalized according to the course policy.
- Final ProjectFinal Project (Group Assignment) (Note: the detailed project assignment will be announced during the course) The final project serves as the group assignment, requiring students to integrate and apply the full range of concepts covered in the course. Working collaboratively, each team will select a new technology, product, or venture and evaluate its financial viability. The assignment typically involves: - Conducting a structured financial analysis using the models and tools introduced in class; - Developing scenarios and assessing associated risks, costs, and potential returns; - Converting complex financial insights into clear, actionable recommendations for decision-makers. The project emphasizes teamwork, practical application of analytical frameworks, and professional communication. Deliverables include a written report and an oral presentation.
Interim Assessment
- 2025/2026 4th module0.4 * Final Project + 0.2 * Homework 1 (HW 1) + 0.2 * Homework 2 (HW 2) + 0.2 * Homework 3 (HW 3)
Bibliography
Recommended Core Bibliography
- Hall, B. H. (2002). The Financing of Research and Development. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edssch&AN=edssch.oai%3aescholarship.org%2fark%3a%2f13030%2fqt34c1c643
- Handbook of the economics of innovation : Volume 1-2, Hall, B. H., 2010
- The financing of R&D and innovation. (2010). Netherlands, Europe: UNU-MERIT, Maastricht Economic and Social Research and Training Centre on Innovation and Technology. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.FD9E9AC6
Recommended Additional Bibliography
- 9781799810896 - Sinem Derindere Köseoğlu - Valuation Challenges and Solutions in Contemporary Businesses - 2019 - Business Science Reference - https://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=2257542 - nlebk - 2257542