With no class to take on venture capital investing, some University of Minnesota students decided to start doing deals instead.
About two years ago, a group of business students quietly launched what became Atland Ventures, a VC fund with about $150,000 in capital under management. An alumnus who wished to remain anonymous provided the group with its original pool of capital, and the fund has already invested in two Twin Cities companies: St. Paul-based Structural, which makes human-resources software, and Minneapolis-based Dispatch, which makes an app for business-to-business deliveries.
Going forward, Atland wants to raise a larger fund that would allow it to do more deals, said Lucas Vaz, a student and managing partner at the fund.
Atland doesn’t take money from the University of Minnesota and operates in much the same way as a traditional venture fund. Like most VC firms, students earn compensation through carried interest, which represents a cut of profits received by investors in the fund. “We have real skin in the game,” Vaz said.
The fund’s initial goal was to give students hands-on experience in entrepreneurial finance, something that often isn’t a focus of business schools, he added. “No school teaches you how to think like an investor not in public companies, but in startups.”
Atland is open to investing in companies in any industry, though it prefers to stay away from startups developing invasive medical devices. It puts between $10,000 and $25,000 into each portfolio company.
Students perform thorough due diligence before making investments and tap into a network of experts for advice. It works closely with Gopher Angels, a Minneapolis-based network of angel investors that mostly backs Midwest startups.
Atland hasn’t pursued seats on boards in the same way many VC firms do after they invest in a company. However, Vaz said students have given co-investors and portfolio companies value input, especially when it comes to reaching young consumers. “We bring the Millennial and GenZ perspective and thinking about how you engage those generations.”
Atland’s expertise has been helpful to Structural CEO Scott Burns, who said due-diligence work generated by students impressed other investors. Atland has also connected his company with intern candidates.
“They are atypical but powerful allies,” Burns said.
Because it is student run, leadership at Atland Ventures changes routinely, so students frequently mentor new members and pass down detailed memos about deals and the thinking behind them, Vaz said.
Students who want to join Atland’s team face stiff competition. More than 100 students applied during the most recent admission period and only eight were accepted.
So far, Vaz has seen the Atland experience inspire some students to consider entrepreneurial careers.
“I’ve had people say, ‘A year ago, I would have thought I’d go the traditional path and do two years of investment banking and work for a corporation. But now I understand I have my own ideas,’ ” he said.
Source: University of Minnesota students take on startup investing with Atland Ventures – Minneapolis / St. Paul Business Journal