University Growth Fund is an education-based growth equity fund headquartered in Salt Lake City. They provide college students with real-world experience working in venture capital.
Peter Harris, a founding partner with University Growth Fund, spoke with us about the program’s selection process and the benefits it provides to the students who participate.
Can you provide an overview of University Growth Fund?
University Growth Fund is a student-run venture capital fund. At any given time, we have 30 to 40 college students in our program who do all the due diligence on our investments. However, we’re also structured like a traditional venture capital fund in that we have investors, such as Ally Bank and American Express, who expect a return on their investment.
Our mission is dual purpose – to provide students with an exceptional experiential education and to drive great returns for our investors.
What’s the history of University Growth Fund? How did this great idea come to be?
University Growth Fund is a successor of sorts to another fund my partner and I ran for about eight years called the University Venture Fund. It was established in the early 2000s by a group of students who were passionate about entrepreneurship and investing. That fund raised $18 million and had a number of IPOs and other successful exits.
A couple years ago, my partner and I launched University Growth Fund as a way to continue the model we had helped build at University Venture Fund. We have been in operation for two years and have made 14 investments to date.
What’s the recruiting selection process like for your program?
In a typical recruiting season, we’ll get 100 to 150 applications for 10 to 15 spots. I review each resume and bring in around 75 applicants for a first interview round. It’s a short, 15 minute interview. I ask three questions, two easy ones and one hard one. The goal is to get to know the candidate and see if they’re a cultural fit. I also try to gauge how much they know about venture capital, entrepreneurship, private equity and so on.
If the candidate performs well in that interview, we then assign them a company to review. We give them three options with a little background and they pick one to analyze as though it were an investment opportunity. They have a week to submit a presentation and investment memorandum. If they do a good job, we invite them in for a second interview where they present their analysis. We grill them on their entire analysis – tearing apart all their assumptions and pushing back on some of their findings and recommendations. We’re testing how much they prepared and how thoroughly they know the company.
We’ll often have, for example, an accounting student with a 4.0 GPA who struggles with the valuation exercise. The company’s financials aren’t available to them and they don’t know where to go to get that information.
Contrast that type of applicant with an English undergrad who has never seen an income statement but talks to professors, watches YouTube videos, reads books and puts something together they built from the ground up, knowing it’s wrong in a lot of different ways. But they’re at least attempting to meet the requirements and create a valuation, which gives us a lot of insight into the individual: how hard they’re going to work, how they think about things, and how passionate they are about the opportunity.
If they do well on their valuation, we then make them an offer and bring them into the firm.
What do you value in candidates, beyond relevant skills and experience?
Honestly, we’re not too focused on skills. We look for two things. People who are passionate about venture capital, private equity, entrepreneurship and/or technology. You need to be passionate about what we do because it’s a lot of work. We want to see that they’re learning on their own, during their free time. We also look for smart people who have the intellectual horsepower to get up the learning curve and help us make good investment decisions.
At the end of the day, it’s not a club. It’s not a class. It’s a real fund. We have real money from investors and they expect a real return. If you have those two things, we are confident we can train you on everything else. If you don’t have those two things but you have all the other skills in the world, you’re probably not going to be a great fit. Often times, we get applicants who are looking for a line on their resume and those people are some of the worse candidates for us. The people who are passionate, smart, hard working and will eat up the entire experience are the ones we want.
What are the advantages to a student participating in your program?
Venture capital is an incredibly difficult industry to get into. There are very few funds and they’re typically small. Even if you can intern with a venture fund or private equity fund, you don’t get the same level of exposure and experience. So, an opportunity like ours just doesn’t really exist.
Within our fund, the students drive as much as possible. They help us source deals and work on the deal teams. They talk directly with entrepreneurs and build relationships with them. They do all the due diligence, from start to finish. Every student gets to vote on whether or not we invest in new deals. They also present to our investment committee, which is made of top-notch investors, and get to learn directly from them what a good investment looks like. As a student, you get this incredibly rich experience that’s as close to being a partner at a venture fund as you could get while being a student.
That’s the big value add and everything else builds off of that. Over the last ten years or so, we’ve had 100% placement of our students into some of the best jobs across the country and they are making 50-60% more at graduation than their peers in those jobs. But the most interesting stat to me is they make 35% more after 7 years in their career, compared to their peers who have been out in their career for 15 years. When students come into our program, we tell them: work really hard, get this great experience, build a great network and we’ll help you completely change your career trajectory. You’ll get jobs and opportunities that, in many cases, you didn’t even know existed before joining our program.
Can you share any success stories about students going on to do great things after participating in your program?
We had a student join us about a year and a half ago from a small school here in Utah called Westminster College. It’s not a recruiting target school for many large companies, let alone investment funds. This student joined our fund and made it clear that he really wanted to work in venture capital when he graduated.
He was passionate and worked hard. He became one of our senior associates, leading a number of deals for us. Sure enough, about two months ago, Technology Crossover Ventures was looking for an associate to join the fund. We got wind of it, sent letters of recommendation on his behalf and they agreed to interview him. One of the questions they asked him was, “Tell us about an investment in our portfolio that you like.”
He was on the team here at University Growth Fund that invested in Spotify and they also happened to be an investor. During that interview, he was able to talk at an incredibly deep level about Spotify. He talked about its challenges, advantages and outlined his investment thesis in a compelling way for them.
Out of all the people from across the entire country they could’ve selected, they ended up making him an offer. He was able to achieve what he wanted to do, which was get a job in venture capital coming out of a lesser-known school in Utah.
I love investing on its own but I also really enjoy working with students. I could spend the rest of the day telling you more success stories. Not every student in our program gets a job in venture capital but many go work for hedge funds, tech companies, start their own venture-backed companies, or work in investment banking and consulting. Seeing these students go on to achieve great things is what makes doing this a lot of fun and really fulfilling.
What’s the future hold for University Growth Fund?
We’re focused on providing world-class experiential education for our students and making the best investments we can. If we can do those two things, we believe we’ll be able to raise more funding and will be around for a long time.
We also opened our first satellite office last year in San Diego. We’re constantly thinking about how to increase the breadth and depth of the impact we’re having on students.