Many founders of Michigan-based, early-stage startup companies are going back to school at Michigan Ross these days. But not to take classes, per se.
Rather, these entrepreneurs are collaborating with mentored University of Michigan students in Professor David J. Brophy’s Financing Research Commercialization course to jump-start their companies’ growth.
Together, these newfound partners are refining business plans and market-entry strategies, accelerating the commercialization of research discoveries and disruptive technologies, and raising venture capital to fund expansion.
Since its inception in 2004, Brophy’s class has provided student-led business-development and capital-raising assistance to 190 early-stage companies, including 25 ventures that have procured their targeted funding. More than 600 U-M students have gone through the practicum and become part of the Michigan Ross Center for Venture Capital and Private Equity Finance (CVP) “Next Mile to Funding” venture capital network.
Last fall, 15 teams of graduate and undergraduate students were paired with emerging companies, including U-M spinouts that are commercializing new technologies. The students conducted due diligence, calculated valuations, developed financial plans and made key strategic decisions. Business mentors with deep experience in starting, building and financing startups helped them put textbook theory into practice.
As a capstone for the practicum, each team prepared and presented an investor pitch on Dec. 13 to a panel of judges, who included members of the Michigan Venture Capital Association and the regional business and financial community.
The practicum’s goal, according to Brophy, is to give emerging, fast-growth companies a fresh set of eyes, minds and hands that can help them progress “the next mile” to raise external equity capital. By focusing on growing the company’s enterprise value, students receive an action-based learning experience that prepares them to become “fundable founder/CEOs” of their own entrepreneurial companies in the future.
“We also are impacting and contributing to the marketplace,” Brophy said. “There’s a role for all of us to play.”
Springboard for Future Startups
Several students in the Financing Research Commercialization course said they will apply their classroom experiences to their own startup ventures. “I plan to start a company in the web-tech space next semester, so I wanted to get some experience,” remarked Luke Donahue, MBA ’18, who partnered with the founders of Mi Padrino, an online crowdfunding platform for Hispanic celebrations.
Jake Wasserman, BBA ’18, said he plans to enter the investment field after graduation, but hopes to launch his own company or become a venture capital investor someday. “It was cool to work with a startup,” commented Wasserman, who teamed up with MySwimPro, the first swimming app designed for the Apple Watch. “I got exposure to a new company and a new market.”
Natalie Pasicznyk, BBA ’19, who partnered with GreenMark Biomedical Inc., said she gained a greater understanding of teamwork, business models and value propositions. Her teammate, Kunj Modi, BBA ’18, indicated his biggest takeaway was “getting in on the ground floor with a startup and seeing how it creates a business plan and pathway to funding.” Modi added: “This was a good example of applying academic theory in a real-case scenario.”
New Strategies for Growth
Startup founders who participated in the Financing Research Commercialization class benefited in a number of ways.
“The student team helped me rewrite my business plan and beef up our company’s marketing and promotion on social media,” reported Steve LeBeau, the president of NanoMag, a biomaterials development and manufacturing firm in Livonia, Michigan. “They also made suggestions about entering new markets.” The company presented at the 2017 Michigan Growth Capital Symposium, and has hosted 14 interns from the U-M and other colleges and universities.
“We were thrilled with our student team, who performed well above average,” remarked Steven Bloembergen, chairman and CEO of GreenMark Biomedical Inc., an East Lansing, Michigan-based biotech company focused on next-generation diagnostic and therapeutic agents for tooth decay. “Their survey is a great example of a valuable contribution from this course to GreenMark, with highly encouraging results on ‘desire to use’ and ‘pricing strategy’ from around 400 dentist respondents.”
Bloembergen also credited mentors Doug Finch, Alberto Elli, Bill Rauwerdink and Greg Free for their assistance. “Each took time to reach out to us on numerous occasions with helpful advice and even in-person meetings at their workplace, home or restaurant,” he added. “It was a wonderful, fun and educational experience for our company.”
Tim Moore, the president of Clixie Media, took part in the Financing Research Commercialization class in fall 2016. A student team improved his company’s organization, brought different perspectives to the table, and helped Clixie Media refocus from trying to sell a product to selling a company. The company hired one of the students as a summer intern and then as a full-time employee. It also procured additional funding from private individuals. This past fall, Clixie Media launched its interactive video platform in the Financing Research Commercialization class and used it to film the Dec. 13 investor pitch event.
“The class has incredible value,” Moore said. “I am not sure if the students realize the opportunities presented in the class for networking and access to very successful individuals. As a company exec, we were able to quantify data (value proposition, strengths/weaknesses), adjust market strategy and business plan accordingly and validate the revised focus. I think the mentors receive value from exposure to fresh ideas/concepts and networking. Professor Brophy is an amazing person, and we are proud to work with him.”
Funding Targets for VCs
The venture capital investors and corporate executives who served as judges for the 2017 Financing Research Commercialization investor pitch event got an early look at new technologies and promising startup companies.
“As an investor, this is an opportunity to see how the next generation of new companies is thinking about growth and value creation,” explained Sonali Vijayavargiya, the founder of Augment Ventures. “We also see different businesses at different stages in their development. If I find something that meets my fund’s objectives and goals, I will invest.”
“I’m looking at these startups as possible portfolio companies,” said Hugo Braun, the founder of North Coast Technology Investors LP. “This is an opportunity to get to know the management teams and build long-term relationships that may lead to funding.” Building a sense of community among businesses, venture capitalists and the University of Michigan also spurs attention, momentum and excitement in the state of Michigan, Braun added.
As a strategic investor, Brad Sadowski, senior manager of mergers and acquisitions at Stryker, said he relishes the opportunity to preview new technologies emerging from the research labs at the U-M and other institutions. “I don’t often invest in early-stage companies, but I like to keep my finger on the pulse of the medical-device space,” he remarked.
Linda Fingerle, execMBA ’13, the president and managing director of Tappan Hill Ventures, already has invested in one tech-based company that participated in the Financing Research Commercialization course ─ New Eagle. “We invested alongside Ann Arbor SPARK in an initial round of funding,” Fingerle reported. “We all got our money back plus interest.”
In addition to tracking new ideas and trends that can help her firm’s deal flow down the line, Fingerle said she loves coming back to Michigan Ross. “It’s energizing and a learning experience,” she explained. “I want to help Dr. Brophy and give back to the University.”