Venture Capital Investment Competition Is The Real Deal
Community News
CHAPEL HILL, NC---Lots of colleges and universities hold mock venture competitions in which students pitch their ideas to investors, but the in Venture Capital Investment Competition, real entrepreneurs pitch to students acting as investors with venture capitalists acting as judges.
In its 12 years, the VCIC has helped a dozen alumni find work in venture capital firms after graduation, and about 25 percent of participating entrepreneurs go on to raise capital following the event. The organizers of VCIC are quick to point out that the mission of the program is educational, not commercial, and none of the deals are known to have been initiated at a VCIC event.
"We're not in the business of playing dealmaker," comments VCIC director Patrick Vernon from UNC's Kenan-Flagler Business School. "We are focused on teaching students about financing new ventures, and the most effective way to do that is to expose them to the best deals and investors. Lucky for us, the best entrepreneurs and VCs like to meet each other, too."
What began as an experiment in 1998 at the University of North Carolina at Chapel Hill in response to the bubble of business plan competitions popping up at most business schools, has also grown into a virtual venture job fair and marketplace.
**Entree to The VC Life **Many of the competitors aspire to become venture capitalists, and quite a few have achieved it. Six VCIC alumni have gone on to participate in the prestigious Kauffman Fellows Program, working in VC firms from Silicon Valley to Munich, Germany.
David Jones of Southern Capitol Ventures in Raleigh, who participated as a judge in this year's competition is one alumni of the contest who went from playing an investor to becoming one. "As a student," Jones says, "You learn all about venture capital. You learn how to evaluate and value a company. You learn all the legal and economic terms that go into drafting a term sheet for investing in a company. You do about two days of reading the plans and researching them. You come in spending a lot of sleepless nights preparing."
Jones, who has been a judge for the last several years, says he evaluates teams on "all the usual things, how much homework they have done, how well they understood the business. "I also always like to look at how they evaluate the entrepreneur. There are lots to be said for evaluating a technology, but you should also look at how scrappy and tough the entrepreneur is."
"The most valuable thing is seeing these students come in and get their arms around all the moving pieces that come into play, not just the technology and financial side, but also personal evaluation and legal skills. Most teams have a legal person," he said.
**Some Play All Three Roles **VCIC has even had individuals play all three roles in different years: competed one year as a student, got a job at a VC firm and returned as a judge, then went on to start a new company and came back to pitch.
This year, 11 UNC teams boiled down to six teams of five each. About 50 schools nationally participate and some schools field as many as 30 teams. The regionals will be held late in February and the finals at UNC in April. Regional competitions include teams from Duke, Wake Forest and the University of Virginia, among others, in a contest that is a MBA version of a basketball tournament, says Patrick Vernon, associate director of the Center for Entrepreneurial studies at UNC's Kenan Flagler Business School.
What Makes This Work "What makes this work is that it charges the batteries of the professionals who spend a day with the students," says Vernon. "I think at the end of the day, a lot of entrepreneurs are surprised how good the experience is."
He adds that entrepreneurs often come because they want business plan feedback from the venture capitalist judges. "That's the reason they come," Vernon says. "But I think afterward they're amazed at the feedback they get from the students."
Lisa Maki a co-founder and President of Charleston-based Belief Networks, says, "It's invaluable for a start up to get free, un-biased market analysis from a group of top MBAs. I was impressed by their questions and sophisticated analysis, both of which made the term sheets we were presented, their pre-money valuations and their exit values--all in line with our own cap table--a huge validation of our work and market analysis."
"Making our pitch and addressing questions in successive due diligence sessions was a great way to both identify areas of consistent interest and target our responses to effectively address those areas as quickly as possible during the pitch," she said. "Overall, UNC's VCIC is a fantastic opportunity for startups to receive high quality, regionally un-biased analysis and validation of both business plan and early stage valuation in a constructive environment."
Allan Maurer / TechJournal South