Founding members of Emory Goizueta’s new student-run venture capital fund: from left, Miguel Vergara, Jack Semrau, Dylan Cowley, Humza Mirza, and Alexia Brown.
Venture capital investments have quadrupled in the past 10 years, but that hasn’t led to an explosion in support for under-represented minority entrepreneurs. Quite the contrary. Women and minority founders receive less than 3% of capital investments, while Black entrepreneurs are rejected for loans almost 20% more often than White entrepreneurs and only 1% of VC-backed founders are Black. Fewer than 2% are Latinx.
Racial inequality in the business world is a systemic problem requiring a systemic response. But it certainly helps turn the tide when elite business schools pitch in. Which is why Emory University Goizueta Business School has launched a student-run venture capital fund to help confront the problem. Created in conjunction with the Roberto C. Goizueta Center for Entrepreneurship & Innovation, the $1M Peachtree Minority Venture Fund is dedicated exclusively to Black, Latinx, and Native-American entrepreneurs.
“There’s a troubling trend in venture capital,” says Humza Mirza, Goizueta full-time MBA student and one of five Peachtree managing partners. “Money is being disproportionately allocated, and one of the biggest issues that we’re seeing is the lack of community access to capital. Black, Latinx, and Native Americans don’t have the same access to the initial seed fund as others have.
“If you don’t get that initial boost of capital, you don’t have the same fuel to fund your business.”
BIRTH OF A FUND
Robert Kazanjian
“We’re trying to address the inequities and deficiencies in venture capital by putting money into the companies that need — and deserve — it,” adds Robert Kazanjian, Peachtree academic advisor, Goizueta professor of organization and management, and academic director of the Goizueta Center for Entrepreneurship & Innovation.
The idea for the fund came from four Goizueta students who are now Peachtree founding partners: Chis Anen, Kristen Little, Alan Quigley, and Willie Sullivan. After their proposal for the fund was formally approved and announced by Goizueta Dean Karen Sedatole in August 2021, the school allocated $1 million to the fund, proceeds of which will be invested in the companies chosen by the fund’s student team.
When Peachtree’s founding partners started marketing for the managing partner roles in spring 2021, Mirza was astounded by the data they were showing in relation to the racial inequities in venture capital. “The opportunity to provide community access to capital is an amazing way to make an impact and be an ally, especially after the death of George Floyd,” he says.
Five managing partners were chosen — Mirza, Alexia Brown, Dylan Cowley, Jack Semrau, and Miguel Vergara — in spring of 2021. This month, the partners hosted their first kickoff event to source students from the MBA, law, and BBA programs to join the team. The fund — which will be run by student managing partners, senior associates, and analysts — will research hundreds of minority entrepreneurs, do their due diligence on each, and make investment recommendations to a committee composed of Goizueta faculty, staff, and alumni. “Ultimately, the investment decisions are student decisions,” says Kazanjian.
$5 TO $50K INVESTMENTS GEARED TOWARDS ENTREPRENEURS IN NEED
Students involved in the fund will also take a venture capital focused course in which they’ll receive technical, financial training in venture capital investing within a curriculum focused on systemic racial inequities in business. The course will begin in January 2022 once the team is fully formed, and the investments will be made in the spring. The fund is looking for companies that are pre-revenue and in the early stage of angel, friends, and family rounds; for the latter, they’ll provide between $5 – $15K, and for series A rounds, they’ll provide between $25 – $50K.
“We’re trying to figure out ways to do events that highlight the companies we’re investing in,” says Kazanjian. “We are in the process of creating an advisory board that will be mostly composed of 8-10 venture capitalists. We’re also looking to do a series of events where we let some of our companies present to a much larger audience of venture capitalists that we can connect with and invite in.”
So far, there’s been over 100 applicants interested in being a part of the inaugural cohort. To gain acceptance, each individual has to submit an application, resume, and develop an investor deck. “We want to see how the individual believes that a company fits our mission,” explains Mirza.
After the application process, the managing partners interview interested applicants and then decide on a team of three to four senior associates who will manage a team of four to five analysts. “Overall, we’ll have a class of about 25-30 individuals,” Mirza continues.
The fund also includes three academic advisors, including Kazanjian, Amelia Schaffner, director of Entrepreneurship Programs and The Roberto C. Goizueta Center for Entrepreneurship & Innovation, and Jill Perry-Smith, senior associate dean for strategic initiatives. Their role is to provide support on how to structure the fund and connect the team with key academic and mission-focused stakeholders within Atlanta.
THE NEED FOR EARLY-STAGE SUPPORT
Kazanjian shares that when an article in Fast Company was published two years ago declaring Atlanta the US capital of entrepreneurship, a conversation at Goizueta was started about how to engage with the entrepreneurial community. “We encounter lots of people with strong entrepreneurial interests,” says Kazanjian. ”But there’s a lack of support at the early stage of funding for underrepresented minority entrepreneurs.”
According to Kazanjian, the Peachtree fund mirrors VC funds at other universities, including Michigan Ross, Cornell, and Rochester. However, what sets Peachtree apart is that it’s industry agnostic and is focused on supporting entrepreneurs in need across the nation, not just locally. “Early on in the fund, the investment companies will likely be more Atlanta centric as that’s where the school has the most connections. Ultimately, the long term desire is to quickly get out across the rest of the U.S.,” he says.
Mirza hopes that the Peachtree fund can serve as inspiration to other business schools across the country. “We want to prove this concept and show that other business schools will see the effect and the impact that we’re creating and the learning opportunities that ensue. Very quickly, our one million dollars will multiply as this model spreads through higher education nationally,” he says.
Humza Mirza” “There’s a troubling trend in venture capital”
‘I’VE FALLEN IN LOVE WITH THE IDEA OF EQUITABLE VENTURE CAPITAL’
Prior to starting business school, Mirza worked in the healthcare startup industry. With a passion for the intersection of integrated and digital health, he was drawn to Emory University due to the school’s strong reputation in public healthcare. “I knew that the opportunities that would be provided at Emory would be incredibly beneficial for my career,” he says.
Mirza believes that Goizueta’s small class sizes and tight-knit community have allowed him to establish himself as a leader and grow his skills — an opportunity that he may not have had at a larger school. His current role with the Peachtree fund is in marketing and recruiting, with his main focus being media outreach, building a social media presence, and sourcing the fund’s inaugural cohort. “I’ve been able to come in with little background in venture capital and become a managing partner of a venture capital fund,” he says. “I’ve fallen in love with the idea of equitable venture capital and the opportunities it presents.”
Mirza says that he’s now pivoting towards how he can provide equitable venture capital in the healthcare startup industry; after he goes through the Peachtree course, he’s confident that he’ll have more knowledge on how to make equitable decisions that are free from bias. “I want to make sure that I’m going into the venture capital world with a completely objective and open mind, and make sure that all of my decisions are equitable, thoughtful, and intentional,” he explains.
ACTION SPEAKS LOUDER THAN WORDS
“The vast majority of venture capitalists are white males, whose networks are composed of other white males,” says Kazanjian.
To unlearn the harmful biases that currently plague the venture capital world and contribute to its inequities, Kazanjian is proud of Goizueta’s contributions; he says that at the institutional level, everybody understands and addresses DEI efforts. But what he’s most excited about with the Peachtree fund is that it’s going one step further than ‘putting words to it,’ as he describes. “I don’t mean to diminish the importance of commitments and support,” he says. “But we want to address these issues in a way that advances student learning and has a positive impact on the community. To me, that’s an exciting and meaningful opportunity.”
“As we continue to grow, we want to be a spotlight for underrepresented minority founders nationally who otherwise may not have a spotlight on them,” adds Mirza. “These are the people who don’t necessarily have traditional pathways and access to venture capital and private equity funds as others.”
THE EFFICACY OF EXPERIENTIAL LEARNING
Mirza says that not only is the fund addressing systemic problems, it’s giving the students who are interested in working in venture capital as a career real-world experience. “We’ve all been told how venture capital and private equity is a tough industry to break into, and that you need relevant experience. You need more experience than being in a venture capital club; you need experience doing due diligence and actually investing.”
“One of the reasons I’ve been at Emory for over 30 years is for the potential of what we can do as a small school,” adds Kazanjian. “It’s remarkable the way in which we’ve been able to embed experiential learning opportunities — like this fund — into the MBA curriculum. It’s the size of the school that allows us to do this. I’d love to see students walk away with this experience with a deepened understanding and tangible skills.”
For Mirza, he’s most excited about the learning potential that the fund offers in the form of speaking with real entrepreneurs, learning about their struggles, and being able to offer help. “I’m 100% sure that the Peachtree course will be my favourite class over my entire MBA,” says Mirza.
MAKING AN IMPACT FOR FUTURE GENERATIONS
While Mirza describes $1M as ‘a drop in the bucket in the scheme of venture capital,’ he believes that the value of the Peachtree fund is in highlighting the companies that are yet to be funded. “We want to do our due diligence on these companies and show established venture capital and private equity firms the ones with significant growth potential,” he continues. “We also want to demonstrate why there’s no reason why they can’t be invested in.”
“We’re putting our actions where our words are,” continues Mirza. “We want to work with establishment organizations and industries to make a more equitable society. We’re not coming into the venture capital space to tell them how to do things. But we want to work with venture capital and private equity and make a greater impact than previous generations have.”
“If we can continue to shine a light on the inequities and create students that go into the market with this orientation, we feel like we’d be making progress,” adds Kazanjian.
DON’T MISS CAN KELLOGG BE THE TOP HEALTHCARE MBA? THIS DEEP-POCKETED ALUM THINKS SO and ‘THRIVING IN A COMPLEX WORLD’: GEORGETOWN’S NEW INITIATIVE & THE FUTURE OF BUSINESS EDUCATION
The post Why Emory’s New Student-Run VC Fund Is Dedicated To Minority Entrepreneurs appeared first on Poets&Quants.
Credit: Source link
