Babson Team Shines at Venture Capital Investment Competition
By: Ryo Takizawa (MBA ‘19), Zoya Alim (MBA ‘19), Linh Le (MBA ‘19), Mia Di Stefano (MBA ‘19), and Alex Green (MBA ‘19)
As the premier global institution for entrepreneurship, Babson has taught us the mechanics of entrepreneurship. The New England Regional VCIC competition both provided us with an opportunity to use our entrepreneurial learnings to analyze the business plans of three start-ups and enabled us to get a practical view of the world of venture capital by developing and defending an investment thesis in one company of our choice. We spent the day analyzing start-up pitch-decks, speaking to each entrepreneur, and reporting to the limited partners – all of which allowed to understand the nuances of the start-up ecosystem. Our team, composed of Zoya Alim (MBA ‘19), Mia Di Stefano (MBA ‘19), Alex Green (MBA ‘19), Linh Le (MBA ‘19), and Ryo Takizawa (MBA ‘19) came from a diverse background of venture capital, investment banking, entrepreneurship, and hedge fund expertise with each member adding a unique perspective. We received information to start our due diligence 48 hours in advance, and met as a team before game day to prepare.
The structure of the competition is relatively straight forward. Our team, Cherry Capital, assumed the role of a general partner in a venture fund. The competition kickstarted with quick 10-minute pitches by the entrepreneurs followed by 15 minutes of questions about the pitch. At Babson, we are taught to think like entrepreneurs, so it was interesting to switch roles and observe the entrepreneur from the vantage point of an investor. The start-ups belonged to a wide range of industries including bioscience, dental services and media. These were industries the team members were not domain experts in, however, we were able to critique each entrepreneur’s thought process, growth projections and underlying assumptions. The competition concluded with the team reporting their observations and investment choice to the limited partner. We were questioned on the valuation of the company chosen, our valuation metrics and term sheet conditions, all of which the curriculum at Babson had rigorously prepared us for. For example, I drew upon my experience in Negotiations class where I had to act as an investor negotiating term sheet conditions such as vesting rights and stock options with another student who roleplayed the entrepreneur.
As a team, we recognized the importance of classroom teaching with respect to VC fund math for pre-and post-valuations, however, we realized the key to any deal-making process is strong interpersonal skills. Through the questioning round, we found that in a deal-making scenario, it is of utmost importance to maintain a positive relationship with the entrepreneur and team in question. Number crunching and dynamic excel sheets can only support and add to the trust built by having good people skills. We also received valuable feedback from industry experts in the field of investing as to how we explained our valuation methodology and whether to engage in follow-on rounds as a seed-stage fund. Their feedback was critical to the team in understanding areas we excelled at and skills where there is scope for improvement.
When we learned that we received the 2nd Place in the 2019 New England Regional Finals, it made the hard work that we put into our due diligence worth it. We are grateful for the financial support we received from the Student Leadership Initiative Fund, as the VCIC competition added significant value to our MBA experience. We took back with us many lessons from the competition and shall apply these learnings to our careers. The exposure we received to real-life scenarios and the network we interacted with will surely help us on our career journeys.