Venture Capital crash course

This year European Venture Capital Investment Competition (VCIC) took place in February in Barcelona. ESMT team performed great and was 2nd among top tier business schools such as London Business School, Oxford, HEC, and Bocconi. It is the best result of ESMT in this competition and we, as a team, are proud of it.

The Team included Daria Markova, Julia Odegova, Didier Goepfert, Daniel Abel, and Jose Fuquen. Our main goal was to understand the rationale behind Venture Capital investment decisions.

Since we didn’t know where to start, we started with reading. Blogs and articles gave us tons of information, but it was way too theoretical. The next step included interviews with VCs. Here we faced the first challenge: cold-calling VCs seemed to be a rather ungrateful job. To our surprise, nobody told us. We, financial gods, don’t talk to mere mortals! In the end, we had great talks with Mihai Streza from AQAL Capital, Rodrigo Martinez from Point Nine Capital, Thorben Rothe from Capnamic Ventures, and Philipp Hartmann, a former analyst at Index Ventures. From those, we extracted detailed practical information about assessing entrepreneurs and business plans. Based on this we developed a draft term sheet and our own framework for business plan evaluation. However, we also understood: many VCs, many minds.

We still lacked practice in communication with real startups. So our preparation culminated with a mock day at ESMT. This was the most important stage of our training. First, we managed to invite real entrepreneurs who are looking for pitching to VCs. Among those were Coyno, Elopay, Grabafruit, and Keydock.

Second, we had a great jury that showed us how to improve: Christoph Räthke (GTEC), Olga Steidl (Inbot), Junayd Mahmood, and Andreas Dittes (Talentwunder). Each of the jury members had his/her own unique style, which contributed not only to our learning experience but also to the startups. They had the possibility to rehearse a meeting with a VC and check their own performance in an extraordinary situation. We hope that the expert recommendations they received will help them on their way to success.

We were glad to put into practice all the theoretical knowledge and get expert feedback on our performance. Junayd Mahmood and Andreas Dittes were concise and looking deep into the startup challenges. Olga Steidl showed us the chair-on-fire tactics, shooting the entrepreneurs with simple but burning questions that drilled into the very core of the value-added (or not added). Christoph Räthke representing GTEC was rather tough and critical regarding our startup evaluation. He noticed that our questions had a prepared structure and advised us to be more oriented on the concrete startup we were talking to. His “commonsense” approach included personalized questions to yourself: “Do I (not an average citizen, not Mr. Black, not some imaginary friend of mine) like this idea? Can I feel the pain of the target customer? What kind of person is the target customer?” We also appreciated how much energy and time Christoph and Andreas spent with us: they stayed until late discussing all the possible evaluation strategies.

Last but not least, the mock day was also an enriching learning experience for the audience, mostly students of the full-time MBA and MIM programs at ESMT.

The mock event played a crucial role in our preparation. ESMT team took second place in VCIC and was very close to winning. Probably the best part of the competition day was the feedback session with the judges, experienced VCs from all around the world. They praised our knowledge and realistic approach. The main reason we didn’t take the first place was that we didn’t sell ourselves well enough. Great, there is still some space to improve!