Commentary

Crowd sourced investment


Joseph Steig and Victoria FramA brand new investment model is peer-reviewed investment. This is where the patients get to be the doctor, the inmates get to run the prison, the entrepreneurs get to pick who gets the investment. It’s unique – and it’s powerful.

Initiated by Village Capital, a social investment, impact-oriented non-profit, this organization has done peer-investment programs all over the world. They’ve recently teamed with the National Collegiate Inventors and Innovators Alliance (NCIIA), a non-profit focused on supporting entrepreneurship at our nation’s universities, and implanted a new format of the Village Capital program as part of NCIIA’s VentureWell program.

Last week 16 early-stage clean-tech, social impact ventures in the Village Capital VentureWell program came together for three intense days at Greentown Labs in Boston and the law firm Foley Hoag nearby. The founding entrepreneurs startups in the cohort learned how to think like investors. From panels of experienced investors to learning term sheet deal terms to critiquing their peers and their own ventures, these teams got first-hand experience into the mind of an investor. “You cannot understand what investors want unless you walk in their shoes,” Joseph Steig, manager of venture development for the NCIIA and one of the leaders of the program, told the group on the first day.

In a competitive process for acceptance, the teams came from across the nation – west coast, mid-west and east coast – and from across the globe – China, India, South Africa. The Village Capital VentureWell program is a busy four months, including three on-sites in Boston and multiple coaching sessions and deliverables in between. All of the new ventures have learned through the program to focus on the problem, solution, market understanding, customer identification, business model, and financial sustainability. The cohort is as diverse in industry as it is geographically, ranging from solutions for families in Western China who cannot afford fuel (One Earth Designs’ novel solar cooker), to a  new insulation material that can reduce (or eliminate) the use of styrofoam in insulated packaging and products (MaxQ’s insulated shipping container for blood and vaccinVictoria Fram, James Watso and Lily Bowles from Village Capitales).

As typical with nascent entrepreneurs, the teams need a lot of help getting to scale. A key need is seed funding. While there are incubators and accelerators everywhere, they mostly focus on IT solutions that can get to market in short periods of time with low capital investments. The Village Capital VentureWell program is focused on clean-tech companiesand emerging market IT and distribution solutions that are likely to need significantly more capital along the pathway to success Educating first-time entrepreneurs about the world of equity financing is not easy and many entrepreneurs have traveled the learn-it-as-I-go path. There has to be an easier and better way.

James Watson, program director for Village Capital believes that “If we can train them to evaluate each other’s ventures through the lens of the investor then they will be that much more successful in their own financings.” What amazed me was the crowd sourced approach using real money, $100K to be exact ($50K per company). Ok, it’s not $1M, but it’s still real money – for $50K, you can really get somewhere.

Village Capital anVentureWell participantsd the NCIIA (where I work as director of faculty development and training) are at the leading edge of innovation, bringing this new model of investor-entrepreneurial training to market. There are already plans for a higher profile program in clean tech later this year, and we have thoughts of collaborating to do a similar program for healthcare solutions.

I think that creating new, innovating in entrepreneurial education is hard. But it’s inevitable and I have cast my lot with the NCIIA because I believe that our nation needs entrepreneurship desperately. With a national focus on entrepreneurship in all universities, the NCIIA helps students, researchers and faculty move innovations from the lab to the marketplace. And programs like VentureWell will continue to be at the forefront of how we can do more, do better, and impact our world.

Stay tuned for the announcement about the venture forum in Boston in early March where you’ll be able to visit with the teams and hear their pitches. Announcement and registration will be on the website www.vilcapventurewell.org.

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