Venture Capital Club Hosts Competition

If you grew up watching Shark Tank instead of, say, SpongeBob, you just might turn out like Sebastian Connelly ’22, Ryan Douglas ’22, and the other members of the Rivers Venture Capital Club—that is, willing and eager to spend a weekend morning assessing pitch decks, conducting due diligence, and creating term sheets, all with the goal of deciding how best to invest their employer’s money.
That was the scenario on a recent Saturday in the Campus Center, when the VC Club hosted a competition pitting two real-world start-ups against each other in a quest for funding. The students played the role of junior members of a venture capital firm, watching the businesses’ pitches, questioning the entrepreneurs, and presenting their positions to the judges, who acted as “senior partners” in the hypothetical VC firm. Two teams of Rivers students competed, as did two teams of students from the Winsor School. Of course, no real funding was at stake, but other than that, the parameters were as realistic as possible.
“The two startups are actual businesses run by Rivers parents,” explained math faculty member Elizabeth Wendorf, who serves as advisor to the club. One business helps colleges and universities build out their mental-health resources by connecting students with counselors online; the other develops hardware that reads temperatures and shares them through an app, for industries that rely on temperature-controlled facilities.
On the day of the competition, the Rivers parents who founded these businesses first shared their pitch deck. (For the uninitiated, a “pitch deck” is a short slide show designed to explain a start-up to potential investors.) Following that, each team had 15 minutes with each entrepreneur to ask questions, known as conducting due diligence. Once the due-diligence phase was complete, the teams met for 45-minute sessions in which they decided which company to invest in and created a term sheet that essentially explained the reasoning behind their choice.
“They talk about the research that’s informing the decision, about any reservations they might have, and the offer they are making,” said Wendorf. “How much they’re offering, and what they are asking in return, such as equity or a place on the board. There are endless options of how to structure a venture capital deal.”
Finally, the judges reviewed the terms sheets and interviewed each team (they had also sat in on the due-diligence sessions); it was, says Wendorf, similar to how junior associates at a VC firm might present their findings to senior partners. The judges then named the top teams in several categories, such as best term sheet, best due diligence, and best overall. One of the Rivers teams was ultimately named the winner, but—to a greater degree than in most types of competition—the event was much more about the process than about the results.
In an email after the competition, Connelly and Douglas called it an “unbelievably unique experience for a group of high schoolers.” These types of competitions take place in business schools and colleges, but it is rare, if not unheard of, to see it at the high-school level. “The opportunity to see real entrepreneurs present their own products in real life was educational, exciting, and inspiring,” they said. “Furthermore, the process of presenting our decisions to the judges is modeled to be like junior venture capitalists selling senior venture capitalists on an investment. This is to say that the experience felt very real.”
It is also the culmination of work that has unfolded over the course of the school year within the club. “We started the year with an intro to what VC is, since most high schoolers start off with no baseline knowledge of it,” said Connelly and Douglas.
“We talk about investment—what does it mean? What does the vocabulary mean?” said Wendorf. The club members actually watch episodes of Shark Tank together and analyze the offers, as well as study venture capital from other angles. “The thing that’s interesting about venture capital,” said Wendorf, “is that it’s really about human behavior and markets and consumerism and psychology. The financial piece is just one part.”
But there’s no denying the Shark Tank effect. It may or may not inspire a new generation of venture capitalists, but for members of the Venture Capital Club, it’s certainly been an influence. “I would say,” said Connelly, “it definitely played a part in pursuing this interest.”