I spent the weekend in North Carolina, as a judge at the 11th annual Venture Capital Investment Competition finals. For the uninitiated, this is a business school competition in which student teams form venture capital “partnerships,” and then are required to make investment decisions. This includes elevator pitches from real entrepreneurs, due diligence with the entrepreneurs, submission of term sheets and defense of those term sheets in a Q&A with judges. This year’s event also included a new wrinkle, whereby the teams had to negotiate terms with the entrepreneur whose company they had chosen to fund. So a few notes:
* This event included 50 business schools, and around 600 participating students (in teams of five). Many of those schools held intra-school competitions, with the winner then moving onto one of eight regional events. In other words, the winning team bested 119 other teams.
* That winning team came from MIT Sloan. Its members were Bob Meese, Sim Blaustein, Gaetan Bonhomme, Nikhil Garg and Eric Varma. My favorite moment for them came during negotiating, when discussing keyman insurance on the company’s senior management. Sim said: “We want to make it high enough to protect ourselves, but not so high as to make us want to knock you off.”
* Placing second and third were the University of Washington and University of North Carolina, respectively.
* I want to send special kudos to the team from Wharton. Only group to partially re-imagine an entrepreneur’s business plan. Teams sometimes get too caught up in what the company is focused on today, rather than looking outside the box for what the company could be focused on in the future.
* Best group of entrepreneurs to date. And they’re all looking for money: CardiAQ, City 24/7, SureGene and Widetronix.
* The negotiating sessions were a good addition, but methinks that biz schools need to add a course in bargaining. I’m not saying VCs should always be low-balling entrepreneurs on valuation, but almost every team started from their end point. No wiggle room to use as a trade-off for other terms. Negotiating isn’t synonymous with a Powerpoint presentation.
* A few years back, Chris Wand (now of Foundry Group) asked the Harvard team if it was “smoking crack” – due to an obscenely high pre-money valuation. This year it was Rebecca Lovell of Seattle-based Alliance of Angels. Another absurd valuation, and a question about if the team had been doing shots of Red Bull and Visine. She’s way too nice to ask such a thing, but was goaded into it by far snarkier judges…