Will Brune tackled the rigors of finance and economics at Case Western Reserve University fully expecting he’d land in a conventional banking or investment career.
He loves seeing how financial numbers and markets predict performance, whether it’s a company or stock investment.
That’s why he bit when a colleague suggested he join CWRU’s chapter of the Northeast Ohio Student Venture Fund. Startup companies pitch their innovative products and services to students, who dig into the companies and have a say in deciding which one is worth a $10,000 investment from the nonprofit venture fund.
Brune was hooked. A conventional career in finance took a backseat to the riskier work of venture capital, where investing early in a startup company can pay off big if there’s future success – or return little to nothing if a company fails, as often happens.
“If you're investing in Amazon, Jeff Bezos doesn't care if you're putting in 100 bucks to Amazon stock,” says Brune, a 2023 CWRU graduate now working as an analyst for Mutual Capital Partners in Westlake, a venture capital firm focused on startups in healthcare IT and medical devices. “But for the founders (of these startup companies), it’s so much more important to them. I felt like having the opportunity to give money and fund someone's hopes and dreams is just like the best feeling ever.”
A career-changing experience
For Brune and others, joining the Student Venture Fund was a career-changing experience. The fund started at the University of Akron Research Foundation in 2011 and later expanded to CWRU, Kent State University and The College of Wooster.
More than 1,000 students have participated, with dozens of them joining business startups, landing venture capital jobs or supporting entrepreneurial efforts in and outside of the region. The results align with the venture fund’s goals – attracting and retaining talent and showing students and entrepreneurs, that Northeast Ohio can be a launch pad for business.
“It exposes students to what it’s like to go through due diligence as a startup company by sitting on the other side of the table,’’ said Daniel Hampu, past executive director of the Student Venture Fund and now the president and chief executive officer of the Burton D. Morgan Foundation, which advances free enterprise and entrepreneurship.
While at the Student Venture Fund, Hampu worked with Jessica Sublett and others at the University of Akron Research Foundation to expand the program to other schools. They built an investment fund with grants from Ohio Third Frontier, the state’s technology-based economic development initiative, and the Morgan Foundation, which is based in Hudson. These days, Sublett is chief executive officer at Bounce Innovation Hub, an Akron-based, business-support nonprofit that also administers the Student Venture Fund.
The fund has had more than a financial impact on the young companies and their founders that receive the $10,000 venture investments, Sublett said.
“On the startup side, this is really friendly, early-stage money,” Sublett said. “They have an opportunity to come forward and test out what it’s like to go through due diligence. The investment terms are very friendly. … You know, if you fail in front of big money (investors), that shouldn’t always go well for you.” The student venture fund “is a very friendly way to do that and set you up for the future.”
How the fund works
Here’s how it works: Each semester, the Student Venture Fund puts out a call for early-stage companies seeking investment, typically receiving 15 to 30 applications. Students from all four schools review the applications. Then each chapter, usually made of a dozen or more students interested in entrepreneurship, selects their top three companies. A team from Bounce Innovation Hub reviews the selections and picks four companies to make an in-person pitch to the students and venture fund’s board, composed of Hampu and representatives from the four schools, Bounce and the University of Akron Research Foundation. After the pitch, the Bounce team assigns one company to each of the chapters.
Then begins a couple months of due diligence. Each chapter is led by a student manager, who helps direct student “analysts” in a deep dive into every aspect of the young companies, mimicking the research done by venture capital investment firms. It’s a learning experience for founders and students alike.
"(The Northeast Ohio Student Venture Fund) exposes students to what it’s like to go through due diligence as a startup company by sitting on the other side of the table."Daniel Hampu, past executive director of the Student Venture Fund
Brune embraced the numbers while working as an analyst and then manager of CWRU’s chapter.
“I enjoy that part of the process–understanding their financials, kind of dissecting their projections of how much they think they will make,” said Brune, who has a master’s in finance and a bachelor’s in finance and economics from CWRU. “I like to think about the market they’re in and quantitatively size that. How big is this opportunity? Is there a big enough market that they can really make a splash here?”
Evan Haug was on the other side of the table as a co-founder of Leaf Automation, which is close to marketing a tool that uses artificial intelligence to streamline the computer-aided design and engineering of solar panel arrays. His fledgling company worked with the Student Venture Fund’s Kent State chapter in 2022.
“That was my first experience realizing that there was more to a startup than the technology,” said Haug, a 2021 graduate of CWRU. “I do remember having to take several days to answer some of those questions together with my teammates and my advisors. … We were thankful to answer them in a low stakes environment.”
After several months of due diligence, teams from each of the Student Venture Fund chapters come together, present their findings, and recommend whether their company is worthy of the $10,000 investment. There’s robust debate before the board votes on the winning company.
“It would get heated, I would say in an impassioned way,’’ said Sublett, the Bounce CEO. “Certainly, it stays professional and all that. But the students put a lot of time into it. It’s real money. They’re making an investment. A lot of times when they’re really passionate, they’re also really passionate about supporting the founder.”
Surprisingly, the chapters will often vote not to invest in the startup they researched, said Elyse Ball, vice president of programming at Bounce.
“They’ll say this might be a cool opportunity, but we think we should pass because of things we see as weaknesses and things that need improved upon,’’ Ball said.
Haug’s company won the $10,000 investment, which paid for him and his team to set up a booth at an international solar trade show in Chicago. On the last day there, a meeting with federal energy officials led to a prize of more than $100,000 from the U.S. Department of Energy.
“It was very successful,’’ Haug said of the trade show. “We talked to a lot of people. We validated the idea, and that was all funded by the Northeast Ohio Student Venture Fund.”
The track record
So far, the Student Venture Fund has deployed $470,000 in investments to 29 startup companies, according to Hampu. Past investments went up to $25,000 per startup but are mostly in the $10,000 range now to keep the underlying investment fund sustainable, officials said.
Those 29 companies went on to earn more than $20 million from follow-on investors, he said. Eight of the companies have had exits, meaning they were acquired or finances changed such that the companies paid off the student fund’s investment plus some returns.
Four of the companies have failed, Hampu said. The rest are still operating or still early in their startup phase. There have been no unicorn successes among the startup companies, Hampu said, but there have been some “really good” investment decisions.
That includes Akron Ascent Innovations, a dry adhesives startup that spun out of research at the University of Akron. Barry Rosenbaum, a senior fellow at the University of Akron Research Foundation, was a co-founder of the company, which went through the Student Venture Fund’s due diligence and won a $25,000 investment in 2016.
As it turned out, the money wasn’t needed, Rosenbaum said. The company was going through a parallel due diligence review by a large adhesives business that would eventually invest $1 million. But Rosenbum recalled being more impressed with the college students’ research.
“These kids really dug in and helped us with some very, very important questions dealing with things like channels to market, economics and supply chains,” Rosenbaum said.
Akron Ascent Innovations’ exit in 2021 allowed the Student Venture Fund “to get their money back with some return on investment,” Rosenbaum said. “It was just a very, very positive experience.”
For Brune, the young venture analyst, the Student Venture Fund changed the trajectory of his career.
“Venture (capital) is notoriously hard to get into,” Brune said. “A lot of universities don’t have programs like that, and a lot of students come out of universities not even knowing what venture is. So, it’s just wonderful that (the Student Venture Fund) is at the school.”
Hampu said the Student Venture Fund has done more “than we all could have hoped for.”
In talking with faculty and staff at the four schools, “We think that there’s so much more that it could have done because it seems like a really good program,” Hampu said. “And over the years, it has not gotten a ton of time or attention but still has been able to do some incredible things.”
Editor’s note: Ideastream Public Media receives support for coverage of entrepreneurship and innovation from the Burton D. Morgan Foundation.
