Venture capital competition brings students, entrepreneurs, investors together
Oct. 29, 2008
BLOOMINGTON, Ind. -- In a twist on typical business competitions, students participating in this week's Indiana University Internal Venture Capital Investment Competition (VCIC) will sit as venture capitalists, reviewing pitches for capital from actual entrepreneurs, all while real venture capitalists judge their teamwork and communication skills.
The VCIC is a national competition that places teams of graduate students together, allowing them to collaborate on reviews of real business plans from real entrepreneurs. Teams must evaluate the risks and rewards of the proposals, making their decisions in a competitive and time-compressed environment, before presenting their conclusions on Saturday (Nov. 1).
"At the core of the event is a creative turn of the tables," said Mark Need, clinical associate professor of law and director of the Elmore Entrepreneurship Law Clinic. "Unlike business plan competitions, where students pitch their own ideas to investors, at the VCIC, the students become the investors, hearing pitches from real entrepreneurs. It creates a very powerful learning experience for both parties."
Five teams will compete at the IU School of Law--Bloomington from 9 a.m. to 3 p.m. The winner will represent IU in the national VCIC competition, held at the University of Pennsylvania's Wharton School of Business on Feb. 20, 2009.
The five teams will be made up of Kelley School of Business MBA students, Indiana Law students and JD/MBA students. The teams will receive detailed business plans on Thursday night for review, then listen to actual pitches from the entrepreneurs on Saturday. Teams will then choose one proposal to invest in, negotiate a term-sheet with the entrepreneur and lobby the venture capitalist judges for their support.
"Students learn, entrepreneurs connect with investors and venture capitalists get an early peek at some viable deals," Need said. "It's a win-win-win situation."
Entrepreneurs will present 10-minute pitches, interview with each VCIC team, then work out a term-sheet. After each team selects the proposal they believe will be the most successful, each team meets with actual venture capitalists to present its plan. The venture capitalists, who serve as judges, dig deep into the students' proposals, asking them detailed questions about potential risks and other factors associated with the proposal they choose to back.
Since the VCIC's inception in 1998, about a one-fourth of investment opportunities have gone on to raise venture capital after the competition.
The judges then select a winning team based on the teams' assessments of risk, knowledge of the venture capital process, communication skills and teamwork.
Students can win cash prizes in the VCIC national competition. Last year, more than 500 students, 150 venture capitalists and 100 entrepreneurs participated in the competitions across America, Europe and Asia. The IU Internal VCIC is co-sponsored by the Johnson Center for Entrepreneurship & Innovation and the Elmore Entrepreneurship Law Clinic.