Transcript Document

Leveraging a Student Managed Investment Fund
to Create Experiential Learning Opportunities for
Students Outside of Finance
by
D r. T h o m a s G j e r d e a n d D r. R u s s e l l K e r s h a w
Clark H. Byrum School of Business
Marian University
Indianapolis, Indiana
Contact ([email protected])
Preview
 Literature on Student Managed Funds (SMF’s)
 Venture Fund vs Investment Fund
 Planning and Implementation
 Leveraging the Fund
Clark H. Byrum School Of Business, Marian University
Literature
 Lawrence, E. (2008). Student managed investment funds: an
international perspective. Journal of Applied Finance, 18(2), 67-83.

1969: 12 funds – 2008: 314 Funds worldwide, 289 U.S. Funds

Fund Size: $2000 to $62 million (Texas at Austin)

Sources: 28% from university endowment, 23% from a single
large donor, 49% from various sources, including grants.

Average U.S. fund started with $414,000 in initial capital
(2000-2007).
Clark H. Byrum School Of Business, Marian University
Literature
 Lawrence, E. (2008). Student managed investment funds: an
international perspective. Journal of Applied Finance, 18(2), 67-83.

71% of U.S. funds are structured as a formal class.

Students are responsible for all investment decisions in 90%
of funds.

42% restricted to undergrads, 48% include both undergrad
and grad students
Clark H. Byrum School Of Business, Marian University
Literature
 Lawrence, E. (2008). Student managed investment funds: an
international perspective. Journal of Applied Finance, 18(2), 67-83.

82% of U.S. funds invested in common stock

79% of U.S. funds have a diversification policy.

Several funds manage money of outside investors.
Clark H. Byrum School Of Business, Marian University
Literature
 Lawrence, E. (2008). Student managed investment funds: an
international perspective. Journal of Applied Finance, 18(2), 67-83.

1997-Michigan created the first venture fund with $3 million

6 schools followed, with Utah’s the largest at $18 million
“A student managed venture capital fund offers the best
opportunity in years to capitalize and profit from the research
strengths of universities while enhancing the teaching mission.”
Clark H. Byrum School Of Business, Marian University
Literature
What are the most important skills/qualities organizations value
in a new college graduate?
1. Ability to work in a team
2. Leadership
3. Communication skills
4. Problem solving skills
5. Strong work ethic
6. Analytical skills
(National Association of Colleges and Employers Job Outlook 2012 survey)
Clark H. Byrum School Of Business, Marian University
Literature
Clinebell, J.(2013) Socially responsible investing and student managed investment
funds: Expanding investment education. Financial Services Review 22: 13-22.
The learning objectives normally identified for SMIFs include
security analysis, teamwork, communication skills, and decisionmaking skills.
Clark H. Byrum School Of Business, Marian University
Student Managed Funds
Venture Fund
Investment Fund
 Publicly traded securities
 Privately held companies
 Stocks, bonds, derivatives
 Equity stake, loans, revenue




traded on an exchange
Larger companies
Liquid assets
Valuation based on publicly
available information
No piggybacking required




share
Smaller companies
Less liquid
Valuation based on private
information
Piggybacking
Clark H. Byrum School Of Business, Marian University
Student Managed Funds
Investment Fund
 Easy to measure returns
during holding period
 Risk is easier to quantify
 No interaction with
management
 National or global focus
Venture Fund
 Difficult to measure
returns during holding
period. (milestones)
 Risk is harder to
quantify
 Interaction with
management
 Local or regional focus
Clark H. Byrum School Of Business, Marian University
Planning and Implementation
 Budget
 Technology
Upgrades?
 Professional meeting space?
 Faculty?
Team with
a practitioner?
 Capital
Sources
Periodic additions
Payouts
to scholarships?
Clark H. Byrum School Of Business, Marian University
Planning and Implementation
 Advisory Board
 Venture
capitalists, attorney, lenders, etc.
 Partners
 Localstake, venture funds, venture clubs and
organizations, Chamber of Commerce
These groups will provide a flow of firms seeking funds.
Clark H. Byrum School Of Business, Marian University
Planning and Implementation
 Class or Club?
 Class
may only meet once per year.
 Club may operate throughout the year.
 Combination may make sense.
 Elective or required?
Clark H. Byrum School Of Business, Marian University
Planning and Implementation
 Objectives specific to Finance
 Most SMF’s don’t have return maximization as a top
objective, although sustainability is critical.
 Develop an appreciation for the link between business
development and venture capital/general business
funding
 Understand and apply the tools of business valuation.
 Develop fluency in the areas of valuation and venture
capital.
 Build relationships with finance professionals.
Clark H. Byrum School Of Business, Marian University
Planning and Implementation
 Objectives beyond Finance
Back to the National Association of Colleges and
Employers Job Outlook 2012 survey 1. Ability to work in a team
2. Leadership
3. Communication skills
4. Problem solving skills
5. Strong work ethic
6. Analytical skills
Clark H. Byrum School Of Business, Marian University
Leveraging the Venture Fund
 Create mutually beneficial arrangements
between campus and funded ventures.
 Partnership
provisions can be contractual, i.e. part of
the funding. Growth companies need talent in many
areas!
Internships
Student consulting
Class projects
Employment
Clark H. Byrum School Of Business, Marian University
Leveraging the Venture Fund
 Create mutually beneficial arrangements
between campus and funded ventures.
 Public
Relations
 Public Relations/COM students create and
manage an
annual PR event.
 Invite the board, chamber of commerce, local media
 Highlight partnerships, jobs created, returns, etc.
 Raise community awareness of the school, the fund, the
business partners.
Clark H. Byrum School Of Business, Marian University
Leveraging the Venture Fund
 Fundraising
A
student managed venture fund attracts interest
• Chamber of commerce
• Banking
• Local government
• Entrepreneurs
Clark H. Byrum School Of Business, Marian University
Conclusion
 Literature on Student Managed Funds (SMF’s)
 Venture Fund vs Investment Fund
 Planning and Implementation
 Leveraging the Fund
Clark H. Byrum School Of Business, Marian University