|UND students hit the mark with student-run capital fund|
Energy, entrepreneurship, tech savvy, and cash: that’s the dynamite combo for the country’s only totally student-run venture capital fund, the University of North Dakota-based Dakota Venture Group (DVG).
Seeded with $200,000 from retired venture capitalist Bart Holaday and his wife Lynn, DVG is making major waves in the world of student venture funds. The five students who run this show as managing directors score zero compensation. The only shiny stuff they get for their efforts is the glow of success, notes Bruce Gjovig, entrepreneur coach and director of the UND Center for Innovation, whose foundation hosts the fund.
Sure, DVG wasn’t the first, nor is it the biggest, venture capital organization that has students associated with it. But make no mistake—with only one year in the market, DVG is the buzz of the very exclusive world of student-operated venture capital funds, well ahead of heavy-hitter names such as Yale, Stanford, Michigan, and MIT. “It’s completely unique among the country’s student-managed venture funds,” says Gjovig, who kick-started the student venture fund idea with his friends Bart and Lynn Holaday.
“Well, for sure, we do it differently,” notes Lee Groeschl, a second-year MBA student and former UND football player from Fond du Lac, Wisc. “This is the only fund where students do all the due diligence, make the final investment decisions, and negotiate the deal's term structure.”
Moreover, the fund operates independently of the University. DVG’s operating account is under the sponsorship of the Center for Innovation Foundation. And all of DVG’s profits are plowed back into the fund, not into the University’s coffers.
By participating in Dakota Venture Group UND students receive an unheard-of opportunity for experiential learning in the field of venture capital and angel investing.
The investment strategy of DVG includes making investments in high-growth ventures started by entrepreneurs in Minnesota and North Dakota. DVG also has a priority to invest in companies started by UND students and alumni. All investments are made with the goal of fostering statewide economic growth.
DVG currently has a non-profit “evergreen fund” fueled by benefactors and is currently in the process of starting a for-profit fund which will produce returns for the investors while providing valuable experience for entrepreneur-minded students. This summer, DVG will also begin offering entrepreneur finance internships for UND College of Business and Public Administration students.
“What’s amazing about this fund is that the interaction between students and faculty day-to-day is minimal,” notes Jeff Stamp, assistant professor of marketing chair of entrepreneurship in the UND College of Business and Public Administration. “Clearly the students are running this—they come to us for guidance, for mentorship, but they’re running the show, and we try not to get in their way.”
“It’s the important part of this—to learn entrepreneurship you have to get your hands dirty,” he says. “Other student venture funds in the U.S. have professional managers, with the students more or less doing research—they’re run one step closer to the real action than a computer-based simulation, but those students don’t actually make the real money decisions. At UND, it’s the students who run the show in the real world.”
“It’s a terrific experience, a once-in-a-lifetime opportunity,” says Amy Indridason, a Cavalier, N.D., native and second-year MBA student who’s the group’s vp of information technology. “We’ve learned not to say no, but rather to do constructive criticism of plans we decide not to fund. We don’t say ‘no,’ we say ‘not right now.’ And we’re not just looking for a positive return on investment (ROI), we’re also looking for businesses that will create more jobs and help to grow the local economy.”
“The angel funds in Grand Forks and Fargo include the DVG members in their meetings while they determine which entrepreneur ventures to invest in,” Gjovig noted. “ The students sit next to angel investors in North Dakota learning from their expertise and process, while adding a valuable extra hand in analysis, due diligence and decision making. Angel investors have welcomed the input of the DVG members as they are well prepared and serious and wish they had this experience when they were in their twenties.”
Check out the Dakota Venture Group’s web site at http://www.dakotaventuregroup.com/