OXFORD, Ohio – Earlier this year, a team of nine undergraduates from Miami University’s Farmer School of Business finished second in the Venture Capital International Competition, held at the University of North Carolina.
It was the first year of competition for Miami – the school received an invitation to compete in October, giving the students only five months to prepare – but they finished better than all the best business schools in the world but two, Notre Dame University and Boston University, which tied for second.
“I told them, if they won, they needed to write a screenplay about it,” said Sarah Anderson, fund manager for Cincinnati startup advocate Cintrifuse. “It’s the ultimate underdog story.”
It’s also a story that wouldn’t have happened without lots of pro bono help from members of the local startup and venture capital community, said Miami business professor Tim Holcomb, who organized and coached the team.
In this year’s VCIC, 78 teams from 78 universities on three continents played the role of venture capitalists. They were given information on three real-life startups and asked to decide in which to invest. Then they created a “term sheet” detailing the terms of the investment. Then they had to explain their choice to a panel of judges.
Before all that, however, Miami had to assemble a team.
Students who showed interest gathered for an evaluation session in which they each told the group what they could bring to the team. Kasey Marenco, a finance and economics major, made the team after she talked about the internships she’d had with a private equity firm and an investment bank.
Meanwhile, Holcomb put together a crash course in venture capital, which included panels of speakers like Anderson and other investment professionals from firms including CincyTech, Blue Chip Venture Company and Allos Ventures.
“It was their participation and development, together with our faculty and students, that created the secret sauce, or the pixie dust,” Holcomb said.
One local expert was Hyde Park resident Elizabeth Edwards, founder of a new venture fund called H Venture Partners. She spoke on one of the panels in January and remembers seeing how motivated and articulate Miami’s team members were.
Eager to help them further, she asked Alan Chan, a San Francisco entrepreneur, to come speak with them. Edwards was in the process of doing diligence for an investment in Chan’s latest company, Joy, which makes a smart photo album.
“He spent the entire day with the team and me at Cintrifuse going through the actual process,” she said. “They got to see the actual pitch, and prototype and the whole due-diligence folder,” and even put together a term sheet.
Several team members plan to intern with her fund this summer, she said.
The team had four classes, each four hours long, on Thursday evenings at Union Hall in Over-the-Rhine, at which they learned about “the whole universe … all the different kinds of work that VCs do,” Marenco said.
One of the founders of local outdoorwear maker Oros spoke and asked the team to do a valuation of his company, she said.
In the regionals, Miami edged Notre Dame University for first place. Before the finals, the team did a practice round at the Ocean Accelerator in Oakley, Marenco said, hearing pitches from two startups there and making mock term sheets.
Locals helped out during the finals as well. Anderson said she received an email from the team during the event asking for a connection with Procter & Gamble Co. to help evaluate an industry. Half an hour later, she made that happen.
The team members were disappointed they didn’t win, Marenco said, but overall, she said it was “an incredible experience.”
One takeaway for the university is that, by and large, students don’t learn venture capitalism at the undergraduate level. This fall, Miami plans to add to the training it gave the team and use it to create a course on venture investing, Holcomb said.
“I would agree that there’s very little out there in terms of these sorts of materials for students, but I don’t think that’s a bad thing,” said David Willbrand, a partner with Thompson Hine LLP’s Cincinnati office, a specialist in representing venture capital funds. Willbrand advised the Miami team on deciphering the jargon of term sheets. He said that, because the venture capital world is so small, there isn’t much demand for trained venture capitalists locally.
He’s glad Miami plans to offer something academically on venture capital because the university is well suited for that. “They have an entire curriculum built around entrepreneurship that’s been decades in the making, that’s world-class, really,” he said.