The past few years have seen a large growth of student-run venture capital funds, including ours based out of the University of Minnesota-Twin Cities, Atland Ventures. In my ~4 weeks working at Atland, it’s already been an incredibly valuable experience, as I’m sure it has for everyone else in the company. So it raises the question, why did it take so long for VC to become a part of student-run organizations?
The first reason is simply that VC is hard to get into. Starting a firm involves raising funds from LP’s, incorporating as an LLC, finding/creating a deal flow network, and building a capable team. It’s no easy task. But then again, neither is traditional investing, yet a number of colleges around the country have investment portfolios that students manage.
Another reason is that people don’t think students are capable of running a VC firm. But students just out of college are hired into VC firms and do quite well. Is it that one extra year of age that allows them to perform well at a VC firm? Unlikely.
The biggest barrier, then, is that having a student-run VC firm was a novel idea, and novel ideas are often met with a lot of pushback. No one wants to be the first and then make a fool of themselves because they couldn’t follow through. Which is an odd framework, because with the primary subject of VC interest—startups—being the first to discover a new idea is a golden opportunity. It’s what everyone is looking for. But for some reason, in venture capital, those same principles haven’t been followed.
But, similarly to startups, finding a new idea in VC holds a lot of potential. And there are many reasons why students are well-positioned to take advantage of it. For one, students have a unique perspective on the world that other VC firms don’t. Being Gen Z gives us firsthand experience of the trends and ideas that will shape the future. We also have ambition. When you have a new idea, you need to work incredibly hard to see it to fruition. That’s exactly what student-run VC firms are doing. The third benefit is that it’s a lot easier to build a great team. With traditional VC, there’s a small pool of candidates, and you’re competing against all the other biggest and best firms for the top talent. With student-run VC, you have access to the entire student body, and your only competition is other student clubs, which–unlike VC jobs–aren’t mutually exclusive to your own.
Like all new ideas, there is risk involved. But there’s also a lot of upside. And that’s what makes it exciting.
Author: Ben Stevenson | LinkedIn