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"Opening
Doors: MBAs Gain Keys Needed to Succeed in
Venture Capital"November 24, 2003
In Third Year, Venture Fellows Program
Broadens Reach, Inspires Founding of Private Equity Group
by Jerry Mahoney
When Justin Mabey was evaluating MBA programs, he narrowed his choices to McCombs and a top-ranked public business school on the East Coast. The East Coast school already had offered the 26-year-old Mabey a scholarship and a key role in the their center for entrepreneurship.
But when he visited McCombs in the spring of 2003, Mabey attended a class for the Venture Fellows, a 3-year-old program designed to give MBA candidates an insider’s look at the world of venture capital. “I listened to all the opportunities the fellows had to learn about funds and incubators,” said Mabey. “I was really impressed by the way they had approached that and by the caliber of the students.”
As Mabey’s case demonstrates, in only three years the Venture Fellows program has become a strong differentiator for MBA candidates interested in venture capital. Through alumni, faculty and corporate contacts, the program leverages strong ties to the venture capital scene in Austin, a city long recognized as a techneurial hub and recently cited by Forbes as the country’s “#1 Place for Business and Careers.”
To hear students and professionals tell it, the Venture Fellows experience doesn’t just open a window on a unique arena of finance, it also offers students the opportunity to put their business skills to the test in a setting that demands strong judgment, wide-ranging general knowledge and an appreciation for the finer points of marketing and management that help new ventures succeed.
Popular, student-driven program
First-year student James Walbom founded the program in 1999 as the Venture Capital Fellows. The name was later shortened to Venture Fellows.
There are 26 fellows this year. Assigned to area venture capital firms and business incubators, they get hands-on experience evaluating entrepreneurs’ business plans, and they help groom the plans for presentation to potential investors.
Competition is keen to get into the two-semester program. Second-year student Todd Haskins, who is the director of the Venture Fellows for 2003-04, said 70 students applied for 19 openings last year. The admission process requires candidates to submit a cover letter and resume, and to both evaluate and participate in the presentation of a business plan.
“The students have been very aggressive about building this program,” said Bob Parrino, the McCombs finance professor who serves as the fellows’ faculty adviser. The McCombs program and one at the University of Chicago are the only two in the country that offer credit for participating, Parrino said.
Combining several hours a week in hands-on internships at the participating VC firms with classroom sessions that feature venture capitalists, lawyers and others tied to the industry, the program helps students learn the ropes of the risky world of venture investing. The fellows spend up to three hours in class each week on such topics as placing a valuation on an untested business, negotiating funding deals and other venture topics.
Venture Fellow John Blevins, a second-year student, is helping direct the curriculum of the program. Blevins and Haskins are developing the format for a “boot camp” beginning in 2004 in which second-year fellows will prepare newcomers. The idea is to help the first-year fellows get up to speed so they can get more out of the program. “It will be a two-day, intense lecture series that covers all topics,” said Haskins.
Participating venture firms commit $1,000 per semester to cover expenses for each intern. In addition, firm contacts are expected to spend time mentoring their MBA interns.
At Access Venture Partners, second-year MBA Kristen Gray has dived into the nuts and bolts of evaluating business plans that entrepreneurs submit. In the process, she said, she is learning the critical role that due diligence plays in sizing up the plans. Gray does not aspire to become a venture capitalist, but the real-life experience she is gaining at Access, she says, augments her overall management education at McCombs.
“Entrepreneurs are looking to me as a VC,” said Gray, who started her own consulting business before enrolling at McCombs. “Now, I’m asking questions about their markets. It’s such a fabulous turn of the table, because I could empathize with these guys—I’ve been there before.”
Access Venture Partners was an early adopter of the Venture Fellows idea. Jay Campion, who heads the firm’s Austin office, said that with appropriate guidance the fellows contribute a lot. “Access has benefited substantially from it,” Campion said. “Over the years, I’ve gotten better at working with the Venture Fellows and, therefore, I’ve gotten more out of it.”
Private equity spinoff
The program spurred second-year student Rich Ybarra this fall to launch a new organization within the McCombs School. His Private Equity Group (PEG) will take on a broader world than venture funding and look at investment sectors such as leveraged buyouts and management buyouts, working with the Hicks, Muse, Tate & Furst Center for Private Equity Finance at McCombs.
Goals for the first year include visiting private equity firms and establishing a Private Equity Academy during the mid-semester Plus program next spring.
Like the Venture Fellows, PEG will have about 40 members, but they can be law students, or graduate students in engineering and natural sciences. The group hopes to leverage the McCombs School’s high-powered contacts in the private equity sector, where numerous McCombs alumni and Advisory Council members have leadership positions.
“I felt that extending membership to this diverse group of UT Austin students was justified in that many private equity professionals interact to a great extent with attorneys, and engineers and scientists who are technical experts in various industries,” Ybarra said. “I envision that PEG and VF will complement each other very well.”
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
