On Friday, 20 Yale School of Management students will virtually participate in the school’s internal Venture Capital Investment Competition –– a daylong contest, in which students act as venture capitalists, that attracts over 70 business schools from around the world.
At the competition, three real startup companies will pitch investments to four, five-student teams, who will then select one of these startups to invest in and submit a term sheet laying out the important stipulations of the deal. The students will then pitch their deal to a panel of venture capital judges, who will select the winning team based on the reasoning behind the investment, performance during the pitch and overall communication skills. VCIC Co-Chair Patrick McGovern SOM ’21 said that the school has been holding its own qualifier contests to determine which team to send to the regional competition for the past two years.
“By doing [the competition] internally, it gives more people exposure to the competition than you could otherwise have,” McGovern said. “It’s definitely a great experience if you’re interested in VC-related work or startup-related work, and also this way, when we go to the regionals, the teams have practiced a little. They kind of get how it works.”
Last year’s team won the Northeast regional competition at Dartmouth College and was set to compete in the national competition last March before it was canceled due to COVID-19.
On Wednesday, teams received information about the companies, such as pitch decks, financial forecasts and internal business plans. They were allowed two days to research the companies before Friday’s competition, where they will present the investment they seek and interact with the business founders themselves. This process is meant to simulate the venture capital investment process, McGovern said.
“VC is the hardest sector to break in,” said Jack Pederzoli SOM ’23, who worked in the VC sector before coming to Yale and is the first-year leader for the competition. “It’s really, really hard to find an opportunity. … Every competition you participate in or experience you can get, both in startups or [the] investor side, it helps.”
One of the participating companies, Smart Seal — a company that provides physical products with secure digital identity — was recommended to participate in the competition by Connecticut Innovations, a venture capital firm that has provided some funding to the company.
Smart Seal CEO Mark Shekleton explained that the VCIC is “mutually beneficial” — providing the students with real-world experience and the businesses with valuable feedback “from some very bright minds,” which he appreciates.
“It’s always a good exercise to have someone else looking at our business, to get other input from people who are studying business,” Shekleton said. “We’re all engineers here, so having … very bright students who could take a look and give us some insight is always welcome. And also, it’s an opportunity for us to help out the Yale community.”
ReRent, a home-sharing platform for students founded by Alikiah Barclay SOM ’18, and TryCycle, an accessible healthcare data management system, are also participating in the competition.
Yale’s preliminary round of the VCIC will be judged by six venture capitalists, many of whom are SOM alumni. One judge, Douglas Roth from Connecticut Innovations, said the competition is especially useful because it exposes students to many different types of experiences and stressors, ranging from conducting investment diligence with an entrepreneur to being questioned by the investment committee about their findings.
“That’s probably the number one thing: the diversity of human interactions amongst the team, with the entrepreneur, with us as investors and with their investment committee,” Roth said. “It’s three very, very different types of communication skills and formats, all compacted into just a few hours.”
Roth feels it is important to be involved with these sorts of competitions, which he said help prepare students for a post-graduate job in venture capital.
Mary D’Onofrio SOM ’18, another judge who currently works at Bessemer Venture Partners, similarly felt that the competition offers students an invaluable glimpse into the world of venture capital. She described the competition as a “microcosm of the job” and stressed the importance of being exposed to the different aspects that contribute to a venture deal.
“Venture is a difficult discipline to learn in a classroom,” D’Onofrio said, “and therefore the opportunity to make investment decisions and get feedback on those decisions in a competition like this is special.”
The winning team of Friday’s competition will advance to the Northeast regional semifinal round, which will be hosted by Dartmouth College on Feb. 26.
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Correction, Nov. 20: A previous version of this article mistakenly reported that Friday’s competition was the first internal competition held at SOM. In fact, the school held an internal qualifier competition last year. The article has been updated to reflect this.