The MSU Student Venture Capital Fund announced recommendations for pre-seed investment in five promising Michigan-based startups at the fourth Investment Celebration event held April 22 in East Lansing.
The MSU SVCF is a collaboration between the Michigan State University Foundation, its venture arm, Red Cedar Ventures, and the Broad College of Business’ Center for Venture Capital, Private Equity and Entrepreneurial Finance.
The collaboration gives MSU students taking FI 444: Entrepreneurial Finance hands-on experience in venture capital investing. In the class, students review a pipeline of early-stage start-up companies from the entrepreneurial ecosystem and conduct investment selection, due diligence, market and competitive analysis, and valuation analysis to make an investment recommendation to Red Cedar Ventures.
The five companies chosen this year are:
- Aadya – Cybersecurity Software Solutions
- Enspired Solutions – PFAS removal and remediation solutions
- JustAir – Air quality monitoring
- Polyplastic – Low cost, high performance compatibilizers for plastic extrusion processes
- Rivet – Workforce and equipment scheduling for contractors
“This is a unique program that places MSU among the leading universities in the VC/PE space and adds an important experiential learning component to MSU students looking to enter the venture industry” Zsuzsanna Fluck, associate professor of finance, founder of SVCF and founding director of CVCPEEF, said.
Prior to the event, the SVCF program has resulted in $150,000 of pre-seed and seed stage investments deployed in 14 separate companies. Those companies have gone on to raise over $12 million from dilutive and non-dilutive sources. When the recommended investments are completed, the SVCF will have 19 companies in the portfolio.
“There’s a lot one can learn in the classroom by reading and listening to lectures, but nothing beats a real world due-diligence experience where the students are making decisions based on intangibles that can’t be read in a book” Jeff Wesley, executive director of Red Cedar Ventures, said. “Students quickly learn how much influence the founding team has on making investment decisions.”
The current MSU SVCF portfolio is a diverse set of investments covering many sectors and the new additions will certainly add more.
“Although this is mostly a class about entrepreneurial finance and conducting investment analysis on high-risk startup companies where information is scarce, we are starting to build an interesting portfolio,” Fluck said. “We are mindful of the types of sectors and industries we’re investing in and see this activity eventually leading to future classroom discussions on portfolio construction, management and analysis.”
Most of the companies in the portfolio have experienced success this past year, many of them attracting new angel and venture capital investments in addition to winning grants for non-dilutive sources available from the State of Michigan and federal government programs.
“Having the students think through priced investment rounds, debt conversions, bridge financings and standard venture metrics in a real portfolio will make them more attractive candidates upon graduation,” Wesley added. “We believe this partnership will help solidify the Broad College at Michigan State as a producer of emerging talent for the venture industry.”
The SVCF also has an outstanding team with many different majors/minors represented. The class includes finance, management, supply chain, engineering, computer science, neuroscience and biology majors – and students in the entrepreneurship minor.
“Our engagement with the MSU Foundation on this program creates significant experiential value for Broad undergraduates interested in venture capital investing,” Sanjay Gupta, Eli and Edythe L. Broad Dean of the Broad College, said. “At the same time, this focused collaboration is additive to the broader innovation environment as the Foundation builds out a portfolio of early-stage startup companies derived from within our ecosystem at Michigan State.”
The fourth Investment Celebration Event of the MSU SVCF attracted 100+ participants, including many MSU alumni in the venture industry, advisory board members and guests. MSU alumnus Robert Skandalaris, founder and chairman of Quantum Ventures LLC, delivered the keynote address.