At Michigan’s Wolverine Venture Fund, Students Learn Via Reality VC

6/9/10

Tom Kinnear says he is a great “theoretical golfer.” It is the implementation that is lacking.

In the same way, business students who learn how venture capital works without ever investing real money in real companies may be at a disadvantage, Kinnear says. That’s why, 11 years ago, Kinnear and colleagues at the University of Michigan’s business school launched the Wolverine Venture Fund, what he calls the country’s first student-led venture capital initiative.

“The way I look at it is you can theoretically teach how to do this, which is interesting, but it’s like an athlete being theoretically taught how to play a sport. You’ve really got to play the sport. So, this is the playing of the sport,” says Kinnear, who is executive director of the Zell Lurie Institute for Entrepreneurial Studies at the University of Michigan’s Ross School of Business and managing director of the Wolverine Venture Fund.

The fund’s latest investment was in Delphinus Medical Technologies last month, when Wolverine contributed $100,000 to an all-Michigan VC round of $8 million for the Detroit-based breast cancer imaging company.

Wolverine was launched in 1999 with about $2 million. Since then, the fund has grown organically to $5.2 million, with currently about 14 active investments. Overall, the company has invested in 22 companies, of which four have had successful exits and another four written off. All in all, “classic venture capital,” Kinnear says.

It’s all “under adult supervision,” Kinnear says, tongue slightly in cheek, since the average age of fund participants is 28 years old. The students first have to be admitted to the MBA program at the Ross School, then go through a series of interviews and case studies during a vetting process that eventually picks about one in 10 applicants to join the fund as students.

They are coached by Kinnear and another faculty member and are guided by an advisory board of venture capitalists who don’t tell them what to do, but help them along the way. The decision on whether to look at a firm in detail and whether to invest is all theirs, Kinnear says.

One of the “spectacular exits” Kinnear talks about includes the molecular diagnostics … Next Page »

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