A Sentimental Victory

Just over a week ago, I joined four peers (three MBAs and a law student) to represent Cornell and compete in VCIC, the most prominent venture capital competition in the world. The competition is different from the myriad case competitions that target MBAs, because it focuses on real deals. We posed as VCs and analyzed real seed stage businesses, run by real entrepreneurs. We then chose one to invest in and negotiated a term sheet (OK, so the term sheet wasn't real). The event was a meaningful learning (and bonding) experience, and I don't even regret staying up two nights straight to complete the work.

In the end, our team took home the Entrepreneurs' Choice Award, meaning that the entrepreneurs chose us as the team that they would most like to work with, not only as an investor, but also a partner. There's an obvious tension herein in that VCs and entrepreneurs sit on opposite sides of the table and what's good for the entrepreneur isn't always good for the VC. But while VCs may choose to impose draconian terms in later stage investments to increase their upside and decrease their risk, in my opinion, that simply doesn't make sense at the seed stage. For one thing, at seed stage, no one has any earthly idea of what the value of the company actually is. Every investment is an act of faith and above all else that faith is in the entrepreneur. So disincentivizing the entrepreneur to do a good job is practically the worst thing a VC could do when making an investment.

Of course, I like taking Entrepreneurs' Choice just because, well, I aspire to be an entrepreneur.