RESEARCH TRIANGLE PARK – Daniel Primack, who writes the very popular daily Private Equity Week Wire for Thomson Venture Economics, is full of praise for the annual Venture Capital Investment Competition at UNC Chapel Hill’s Kenan-Flagler Business School.
“I’ve written this before, but will repeat it for the sake of overemphasis: VCIC is the best work-related event I get to attend each year,” Primack wrote last week after serving as a judge in the event. “Apologies to various party and conference organizers (including those at Daddy Thomson), but nowhere else do I learn as much nor stay consistently engaged.”
Patrick Vernon, who runs the program for Kenan-Flagler, graciously accepted the words of praise – then saluted the event himself.
“Stellar” is the word he used to describe the 2006 event. “It was a heck of a year.”
The final round of competition matching teams of college students was the culmination of 30 events, including a regional event in London.
“This is about venture capital, it’s also about learning, and it’s about entrepreneurship,” said Vernon, who is associate director of the Kenan-Flagler Center for Entrepreneurial Studies. Vernon participated as a student in the event, which was launched in 1998, for five years and has been involved in running it over the last four competitions. “There is no better way to learn about starting new ventures than to pretend to be an investor and looking at new ventures as potential investments.”
Primack, who has participated as a judge and a keynote speaker, drew a sharp distinction between UNC’s event and other business plan competitions.
“A business plan competition is just that. You’ve got entrepreneurs coming in with business plans and judges are literally judging that plan based on viability, management and other factors,” Primack said in an interview with WRAL Local Tech Wire. “In this case, there are business plans but they are being judged by students. Then students are then judged on their plans to invest.
“They are really being judged on being good venture capitalists rather than entrepreneurs.”
Five real companies, including two that are Triangle-based (Advanced Liquid Logics and Broadwick), made presentations to the VCIC finalists.
“For the entrepreneurs who show up, it’s good practice,” Primack added. “They get a lot of people asking them questions.”
As for the students, the VCIC is almost like preparing for final exams.
“The students are up all night, stressing out, doing due diligence,” Primack said with a chuckle. “These are pretty competitive folks.
“Some of them do want to become venture capitalists, some want to be consultants, and some want to be entrepreneurs,” he added, “This is the only time and kind of competition where you test your investment-making decisions. There are no classes on how to become venture capitalists. This is something you learn.”
The team from the University of Washington won the event and a $10,000 first-place prize.
“Teams are presented with five business plans for real companies seeking VC funding. They then receive a 10-minute elevator pitch from each entrepreneur, conduct a short due diligence with each entrepreneur, write up term sheets for the deal they want to do, explain their decision making to the judges (actual VCs plus me) and are subjected to an occasionally brutal grilling,” Primack wrote in his column. “Each team this year was required to do exactly one deal, in order to avoid last year’s dilemma of a winning team that – justifiably – opted to do zero transactions.”
The event has also proved to be beneficial to presenting companies, many of which have gone on to win venture funding.
“Five companies presented last year, and two or three received funding,” Primack said. Of this year’s startups, he added, “My guess is at least two of them will get funding.”
