Wharton students `venture' for capital

It's not very often that students find diamonds in the rough, trying to discover the next Microsoft or Intel. But last month, a team of Wharton MBA students got to do just that at the University of North Carolina in the Fourth Annual Venture Capital Investment Competition. The competition, sponsored by UNC's Kenan-Flagler Business School, allowed students to review real companies seeking venture capital funding and decide on which ones to invest in. The students were judged by professional venture capitalists. Venture capitalists seek to fund startup companies that have not yet begun selling stock. "It was a good opportunity to gain practical experience in analyzing businesses," said Wharton graduate student Andrew Feller, one of the five students on the Penn team. The finals comprised the top two schools from four geographical regions. Penn finished second in the northeast region to advance to the finals. The Yale University team won the national competition. The goal of the competition was to have students evaluate real companies and network with venture capitalists. "VCIC is aimed at training the next generation of VCs and teaching them skills that they cannot learn in the classroom," said Jeff Reid, executive director of the Center for Entrepreneurship and Technology Venturing at UNC, the event's organizer. Most of the students involved were either interested in venture capitalism or entrepreneurship as a career. The competition this year had a different taste because of the recent decline in the tech-heavy Nasdaq market. Venture capitalists are now paying more attention to the quality of the businesses they invest in rather than quantity. "There was a different flavor this year because teams invested in fewer companies and negotiated fewer deals," Reid said. The students involved also agreed that venture capitalists were more cautious this year. "The judges declared that they were more conservative in their evaluation [of companies] than in previous years," Feller said. However, despite the declining stock market, more students participated this year than ever before. Reid attributed this to students realizing that "the most important thing to understand is the principles behind venture capital" and not the hype behind the market. The student teams analyzed each company by reviewing a company's business plan, listening to the company's presentation and engaging in question-and-answer sessions with the company's management. The students involved seemed to appreciate the opportunity to get involved with such a realistic venture. "It was good experience for teams to get to see real business plans and meet with VCs," Feller said.