That’s because they – along with students from Walsh University, Notre Dame College, Case Western Reserve University and the College of Wooster – are spending much of their spare time working as venture capitalists.
Not as interns at some firm or at a pretend fund that’s investing play money – the students do real due diligence on area companies that are seeking to raise capital, and they put real money at risk with their investments, too. But only after a lot of consideration, arguing and homework, of course.
The Northeast Ohio Student Venture Fund (NEOSVF) got its start in 2008 at the University of Akron, said NEOSVF secretary Daniel Hampu, who also works at the UA Research Foundation helping to commercialize technology. But the fund really got its footing in 2014, when the Hudson-based Burton D. Morgan Foundation and Ohio’s Third Frontier Fund provided the students with $250,000 to invest.
If the investments pay off, the money will go back into the fund, just like a regular venture capital fund, Hampu said. So if the students do well, there’s no telling how large the fund could become for future participants. But for now, investments are limited to $25,000. Students from all of the schools have so far agreed upon and made eight investments. And while it’s too soon for such investments to have paid off, the target companies all appear to be doing well, Hampu said.
The schools are now conducting their due diligence on this year’s finalist companies and have whittled down more than a hundred applicants to one per school. In April, student representatives of the participating schools will decide on one company — possibly two — that will receive actual investments.
Students run the show
Hampu, who is also active with the Akron ARCHAngels investment group, is an old hand at the investment game compared to the students – but he says he tries hard to stay mostly out of their investment debates so that they can make the decisions themselves. He does provide guidance, but the students seem to have no trouble asking questions that are both intelligent and probing.
At a recent meeting, which students allowed a reporter to observe, the questions came fast and furious – and sounded a lot like the questions most professional venture capitalists would ask. The students were considering an investment in an Akron company that makes spun fibers and is seeking to imitate the strength and characteristics of thread spun by spiders to make a new commercially available material.
“What have they done to protect their intellectual property?” asked one student.
“They’ve raised some money already … How quickly are they going through it?” asked another.
A third asked the question that keeps many more experienced venture capitalists awake at night: “Shouldn’t we be investing based on whether we’re going to get paid back?”
Hampu smiled through it all, patiently answering questions when asked. The company seemed to impress most of the student investors, after presenting to them in person previously.
Of course, Hampu and the students hope that if they do make the investment, it will pay off. But even if they lose the entire $250,000 in the coming years, it seems likely they will have gotten an education worth at least that much.
Entrepreneurs in the making
“Now I can sit on the other side of the table and see – what are investors looking for?” said University of Akron MBA student and Buffalo native Vishal Chaurasia.
And that might be the real point of the entire project. Many of the students, including Chaurasia, are not so much angling to work for venture capital firms, but aiming to be entrepreneurs who pitch to venture capitalists themselves. Chaurasia, for example, has his undergraduate degree in polymer mechanical engineering from UA. He plans to use his two degrees, along with his knowledge of venture capital, to one day become an entrepreneur.
“I want to get things into the marketplace where they can improve people’s lives,” he said. “But I enjoy the whole thrill ride of entrepreneurship – it gives me a rush, I won’t lie!”
Jamie Parker has a similar attitude. He’s a native of the Bronx, N.Y., and a member of NEOSVF. He’s pursuing a doctorate in integrated bio-science at UA. He has a master’s degree in biology and a bachelor’s degree in anthro-biochemistry from Lehman College in New York.
Parker’s not waiting, either – he’s promoting his own clothing line under the brand “Me O’Clock” and designing a smartphone app on the side.
By participating in NEOSVF, Parker is learning a lot of things he would have never learned in a classroom, he said.
“Absolutely I’m learning a ton, and it’s connecting me to some great people … I’ve had a lot of great conversations that have helped build me up on things I didn’t really know much about,” Parker said.
Those connections includes not only Hampu and some of the CEOs of companies that present to the students, but also people like Jon Paul, president of Akron-based Prime Marketing Pros. Paul said he’s used to working with new businesses – it’s a big part of what his firm does – but he loves what he sees in students like Parker, whom he mentors.
“There are some incredible ideas going on in that group,” Paul said, citing things like a device that can produce clean water for field hospitals and doctors, as well as smartphone apps like Parker’s.
Paul, for one, is not surprised when he hears that a student wants to become an entrepreneur.
“That’s how they think,” Paul said. “People now say that in order to be successful, you’ve got to have your 9-to-5job, and also your 5-to-9job – and that’s what they’re doing.”
And that might be the biggest reason that NEOSVF has received support, both monetary and otherwise. Economic developers know that for the region to thrive, it will not only need smart students trained in business and technology, but also a new crop of entrepreneurs. In fact, supporting new entrepreneurs is a chief mission of the Morgan Foundation.
That’s because just a few successful entrepreneurs could have a lasting effect on many other students looking for companies to work for right here in Northeast Ohio.
It could also leave future students an even bigger venture fund to manage, so they can learn even more about investing money and how to secure it as capital for themselves. U A