The Garber Venture Capital Fund at the Penn State Smeal College of Business, which provides master of business administration (MBA) students with the opportunity to evaluate business opportunities and issue funding, is on the precipice of several dynamic changes.
That’s the message Peter Whalen, the new director of the fund and clinical associate professor of entrepreneurship, has for entrepreneurs around Pennsylvania.
“I’m looking at this as a transition period. The seeds that have been sown since the fund was established are beginning to grow and bear fruit,” Whalen said. “Some of our investments will give us a return that enables us to go to another level. We would like to work more closely with our current portfolio and increase the frequency and impact of future deals.”
Established in 1999 by John Garber and his wife, Bette, the $5 million venture fund supports private equity investing in early stage companies. The fund is just one of the many entrepreneurial opportunities housed in Smeal’s Farrell Center for Corporate Innovation and Entrepreneurship. Others include multiple idea pitch competitions in and around the University, developing a new online graduate course, and other programs that are in development.
“Penn State is creating a culture designed to develop entrepreneurs, spur growth, and ensure student success,” said Penn State President Eric Barron. “The Farrell Center is helping us advance this vision by creating partnerships and investment opportunities through the Garber Fund that can drive economic development, while serving our students, our state and the world.”
Smeal’s MBA students engage in the venture capital process by enrolling in the Garber Practicum seminar. Promising entrepreneurs present their business concepts to the class. Students then perform due diligence on the firms, eventually selecting one or two for detailed analysis. Toward the end of the semester, student teams present their findings to their peers and vote on which, if any, new business ventures warrant an investment and propose the offer terms.
That process will continue, Whalen said, but the number of students who participate will increase.
“Early stage investments are extremely difficult to evaluate. We’re looking to incorporate marketing-minded MBA students into the process, as well as finance students, to better understand the source of value creation and market opportunity,” he said. “We’re not going to just make deals, we’re looking at a whole new way to manage the fund.”
Whalen said the Garber Fund will be entertaining proposals from more than just technology companies. Recent examples include INDIGO Biosciences, which has developed a unique method to cryogenically preserve nuclear receptor cells, and Wild Is!, a startup that is producing a line of healthy superfood vegetable broths.
Whalen said one criteria of success for any deal made will be its impact on Pennsylvania. This falls in line with President Barron’s stated goal of harnessing the collective academic and entrepreneurial power of Penn State for the good of Pennsylvania.
“This is what it means to be a public university that combines excellence in teaching, research and service. It also embodies our mission of ensuring access to a top-notch education and improving the quality of life for everyone in the state, and society in general,” said Barron.
For those companies seeking an infusion of venture capital, Whalen said the Garber Fund would need to have proposals in hand by mid-December. The evaluation process would proceed through spring semester and any potential offers would be made in spring 2016.