Park Fellows' venture capital fund offers fuel for high-tech start-ups

By Linda Myers

What moves a high-tech start-up company from an idea lightbulb flashing above someone's head to a record-breaking initial public offering?

Despite news flashes about a new generation of under-30 dot-com millionaires, the ingredients for a successful IPO haven't changed all that much, according to David BenDaniel.

Johnson Graduate School of Management students, from left, Jean Mathews, John Kyles and Alex Ivanov, helped develop the plan for the Big Red Venture Capital Fund. Kyles and Ivanov are Park fellows. Charles Harrington/University Photography

BenDaniel, the Don and Margi Berens Professor of Entrepreneurship at Cornell's Johnson Graduate School of Management, says all that's still needed is the right idea at the right time, a thorough, well-thought-out business plan, an accurate estimate of how much money will be needed to launch the business and, sometimes hardest to find, the money itself.

Now Alex Ivanov, John Kyles, Jean Mathews, Rich Ryan and Tim Krozek, students at the Johnson School with an interest in venture capital, have come up with a plan to make it easier for people with a good idea to capitalize on it. They've started the Big Red Venture Capital Fund, a fund and business incubator for start-up ventures that will link the idea people with Johnson School students, who'll help them create a solid business plan and, if the idea and plan pass muster, actually will help fund start-up costs.

Ivanov and Kyles are Park fellows. The Park Leadership Fellows Program supports 30 exemplary MBA students in each class who have the potential to become business leaders. It requires fellows to initiate a project that benefits the Cornell or local community while they are students and encourages a lifelong commitment to community service. The venture capital fund is a Park Fellows project.

Some alumni and friends of the Johnson School and Cornell have already expressed interest in becoming donors to the Big Red Venture Capital Fund. When it's fully capitalized, the fund will have as much as $10 million to invest in the venture ideas that look most promising, BenDaniel estimates. What's in it for donors is the chance to support the university in a new way and also get a first look at new business ideas with potential for making millions -- and possibly gain tax advantages.

Cornell students, faculty, staff, alumni and friends, community members and anyone else with a good idea can submit it to the Big Red fund managers. A hand-picked team of six to nine Johnson School students will regularly review all business proposals, decide which ones seem most promising and link the idea people with business students, who will help sharpen and refine the plans.

"Let's say there's a student with a Ph.D. in engineering who has a viable idea that's been tickling the back of his brain for a while but doesn't have the time or business skills to bring it to bear," said Ivanov. "We can form a team that can do that."

Then another group of students who run the venture fund's idea incubator will review each plan and decide whether to allocate venture capital money to it. This group also includes an advisory arm of faculty and alumni.

When the start-up business achieves the first milestones set forth in its business plan, but before it goes public, people who have donated to the Big Red Venture Capital Fund will have an opportunity to invest in it personally if they so choose.

"We're trying to mirror the industry we're emulating, to set the bar fairly high" said Ivanov about the rigorous process.

"This process is normal for accelerated venturing or incubators," said BenDaniel. What's unusual is that it is happening at a business school, not through the venture investment arm of a large banking company.

The Big Red fund offers Johnson School students hands-on training in how to run a venture capital fund, including making key investment decisions. The experience should give a competitive edge to job-seeking MBA graduates who, like Kyles and Ivanov, are interested in hard-to-get plum jobs in the venture capital industry. "It will be another reason to go to the Johnson School," said Kyles.

Involvement in refining business plans also will teach students who are budding entrepreneurs just how to go about starting businesses, a subject of particular interest to BenDaniel.

In addition, the Big Red fund will aid in technology transfer at Cornell and elsewhere, helping to bring to market the best ideas that spring from university research. Such ideas are often abandoned because they lack a concrete, well-thought-out business plan that might attract start-up funds, according to BenDaniel.

For more information about the Big Red Venture Capital Fund, contact BenDaniel at 255-4220 or djb16@cornell.edu.