Silicon Prairie students make investment decisions

Dr. Dale Eesley is seeing his vision of a student-led investment fund become a reality as students learn the ropes of venture capital investing.  Dr. Eesley, Director of the Center for Innovation, Entrepreneurship & Franchising at the University of Nebraska – Omaha (UNO), had heard about student-led venture firms for years.  Dr. Eesley had not really…

Venture Fund

Dr. Dale Eesley is seeing his vision of a student-led investment fund become a reality as students learn the ropes of venture capital investing.  Dr. Eesley, Director of the Center for Innovation, Entrepreneurship & Franchising at the University of Nebraska – Omaha (UNO), had heard about student-led venture firms for years.  Dr. Eesley had not really considered that UNO would start one, but he dreamed that it was possible.

One of his early models was the student run effort at the University of North Dakota in Grand Forks, North Dakota – the Dakota Venture Group (DVG). The DVG has been in operation since 2006, and has made more than twenty investments since its inception in 2006 – including 16 that are still active.1 These investments include both student-run and region-wide investments.

With a quixotic hope to build a fund, Dr. Eesley began asking questions and found both the administration at UNO and the University of Nebraska Foundation to be incredibly amenable to starting a student run investment group. The final structure – which became the Maverick Venture Fund (MVF) – took approximately eighteen months to finalize.

UNO inducted their first class of students into the MVF in the Spring of 2018. This group will stay together for three semesters. The first semester is spent in training as students. The second semester is spent making investments, as analysts, mentored by more experienced guides. This first cohort will be promoted to associates in the spring of 2019, when they will both make investments and help recruit and train their replacement analysts.

Dr. Eesley described the learning program as having the goal of helping create a group of students that work to better understand the venture capital and early stage investment process. “The process is non-linear and difficult to instruct,” said Dr. Eesley. Therefore, he believed that venture capital needed to be taught experientially.

The first class of analysts has nine participants – weaned down from fourteen original members of the Spring 2018 class. This group includes both graduate and undergraduate students – including one with a Ph.D. in a life science.

The students helped shape the vision and investment thesis by identifying the importance of providing capital to individuals with ties to UNO. It was not enough to simply have a good idea – but instead, the MVF sought to directly affect the university. Thus, the bar for students to receive capital is lower than a person who is strictly a community member. This should allow more students to receive investment backing earlier in the life of their business.

The MVF will do more than simply write small investment checks. The group will also provide boots-on-the-ground resources to help grow and shape businesses. This means that beyond simply learning how to be investors, the students are also learning how to be advisors and participants in businesses at their earliest stages.

This September marks the entry of the students into their analysis and investment phase. They have already received multiple investment inquiries and reviewed investment pitches from some surprising places – including the community, UNO graduates, and a number from current UNO students. The analysts believe that they are just starting to mine their networks to find opportunities.

Similar Silicon Prairie student run investment funds exist in other locations. For example, the DVG has made more than twenty investments since its inception in firms from all over the region. DVG currently has two separate funds – the Innovation Fund (for students) and Harvest Fund I (which is a joint venture with Evergreen Capital Fund).

One of DVG’s early investments, Corvida Medial, recently raised $11.5 million. Corvida is based in Coralville, Iowa but was able to leverage a small investment by the DVG to create runway. Although DVG invested a small amount of money in 2008, that first investment provided the necessary opportunity for Corvida to grow. This is the type of seed investment opportunity that many student-led groups are hoping to find in their own college towns. Quite often, this hands-on engagement is the purpose around which the fund has been built. The universities and students know that they are ultimately providing relatively small amounts of risk capital, but they also know that they are often the first believers in the new company’s vision.

Graduates of the DVG include leaders at established venture funds – including Arthur Ventures, the largest fund in North Dakota.  Dr. Eesley hopes that the MVF will ultimately be able to tell a similar story to their brethren in North Dakota, though he admits that getting to twenty investments seems a long way away.  “My goal is to simply get to our first investment at this point.”  That investment may occur as soon as this semester if the MVF analysts get their wish.

  1.  According to Pitchbook data

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