Starting this fall, student entrepreneurs at the Johns Hopkins University will be pitching their ideas to a new yet familiar group of investors — their classmates.
A group of Johns Hopkins students and alumni are launching A-Level Capital, a traditional venture capital firm in every legal and practical sense. But decisions to invest the fund's money will be made not by seasoned entrepreneurs or investors, but by students eager to learn the process of vetting and supporting startups.
"It's really a student-run team," said Corey Li, a 22-year-old senior who is helping lead the organization. "It's not like one person is making the decision."
The venture fund seeks to expand opportunities for startups founded by Johns Hopkins students and alumni. Leaders plan to invest between $5,000 and $25,000 in 15 companies this academic year and 80 companies over the next five years, said Elizabeth Galbut, who is organizing the fund and is a 2015 graduate of a joint Johns Hopkins business and Maryland Institute College of Art masters program.
But it also aims to expose students to the world of venture capital, connecting them to investors who might provide further financial support and advice down the road and taking them through the investing process. The fund fits alongside the university's other efforts to boost entrepreneurship, like its growing FastForward accelerator and the Blue Jay Syndicate, a group of angel investors who are Johns Hopkins alumni.
"Sourcing investments, analyzing the investments and then, once you've invested, following those investments, all of those are so critical to the life cycle of a company and of an investment," said Christy Wyskiel, senior adviser to Johns Hopkins President Ronald J. Daniels for entrepreneurship and technology transfer. "To have exposure to that as a student is really helpful and remarkable and true real-world experience."
Galbut, classmate Demilade Obayomi and Paul Grossinger, founder and managing director of the Blue Jay Syndicate, founded A-Level last spring. The process involved the same legal paperwork as any major venture capital fundraising, plus recruitment of a group of about 20 students who will handle the investing process.
Over the summer, Galbut and her partners worked to secure investors in the fund — Securities and Exchange Commission rules prevented her from saying how much they raised.
As the new academic year begins, the group is preparing to launch its investing. It has received applications from nine startups and this month will begin vetting them, with plans to begin a monthly cycle of making investments soon after.
For Li and other students, it is a beginning to hands-on experience learning venture capital. While he has interned at financial organizations, including DreamIt Ventures, JMI Equity and Jefferies, working with A-Level provides a closer look at the investing process.
"You're taking a huge risk on a company — it's very interesting," Li said. "Also, you help them. You actually partner with them. That's the major part I love about this organization."
While the fund's investments are small, they still provide a financial boost for young entrepreneurs, Galbut said. And many of the limited partners invested in A-Level are venture capitalists or angel investors, she said.
"We're pretty much creating a pipeline so a startup can use our investment in, say, the first six to 18 months, and they have our entire community of limited partners to then go look for follow-on financing," said Galbut, who recently co-founded SoGal Ventures, a New York-based venture capital fund focused on women entrepreneurs. "That's where I think our value is incredible."
Investors are expecting value, too. Dave Siebs, a business planning consultant and Johns Hopkins alumnus who is among the limited partners, said one of his children recently started college and another will soon, "and I still put money in this."
He said he sees it as a good investment in the entrepreneurial community at Johns Hopkins, for one. But he is also counting on returns. While he will be involved as a mentor for some companies, he said he trusts the students leading A-Level to pick some winners.
"It's students investing in students as much as possible," Siebs said. "I want to help them be successful rather than be the person who picks and chooses."