CU-Boulder students invest $30,000 in startup through real-life venture capital program

November 26, 2013 •

Elihuu, a startup company whose slogan is “meet your manufacturer,” has met an investor -- a group of University of Colorado Boulder graduate students.

The students last week put $30,000 into Elihuu, an online software platform that connects product designers with manufacturers who can make their wares.

The students turned venture capitalists direct CU-Boulder’s Deming Center Venture Fund (DCVF), which was launched by a donor in 1997 and is a program of the Leeds School of Business.

Selected from across campus to be part of the fund, the students manage everything from scouting new companies to vetting business plans, negotiating the terms of agreements, making final decisions on investments and supporting investees with ongoing resources and advice.

“I think it’s brilliant and that they’re doing all the right things,” said Dorian Ferlauto, founder and CEO of Elihuu, which is based in Denver as well as Oakland, Calif. “I really didn’t know that there is a university fund like this run by students. It’s very unique and I think it’s a great thing in this area where there are a lot of startups.”

The $30,000 investment will go toward development and expansion of the Elihuu tool, which Ferlauto says is similar to a matchmaking website except it’s for designers and manufacturers working to line up with the right business partners.

One appeal to the students as they carried out their research on the company is that Elihuu supports the cutting-edge “makers movement.” The makers movement, which is growing in popularity, is comprised of people like artisans, techies and inventors who create small-scale products on their own.

While investee companies benefit from seed money from the DCVF, the student directors gain professional experience and unique insights that could give them an advantage as they pursue their own ventures.

“By going through the capital investment process and by being on the decision-making side, the students know what questions will be asked of them as entrepreneurs,” said Bret Fund, faculty director of the DCVF and assistant professor of management and entrepreneurism. “They themselves will build better companies or be better able to do whatever they want when they move forward.”

Nearly all DCVF alumni have landed employment in technology companies, venture capital firms or other professions related to entrepreneurship, according to the team.

About 10 to 12 CU-Boulder graduate students from business, law and engineering fields are part of the DCVF at a time. They apply for a position on the interdisciplinary team and serve for about 18 months.

“Students almost never get the opportunity, even through internships, to make venture capital decisions,” said Julie Simmons, director of legal management for the DCVF and a graduate student in both law and business administration. “The fund is completely ours to direct. We bring in the deals, we make the relationships and we make the decisions. The challenges are ours to figure out and the successes are ours to celebrate.”

Some of the student directors receive externship credit from the CU Law School for their DCVF participation; however, many students earn no credit from their respective degree programs.

Investments by the DCVF typically are in technology startups. In addition to Elihuu, the fund’s portfolio currently includes Birdbox, an online platform that organizes individuals’ social media content; Flixmaster, a cloud-based video editing and publishing tool; and SpyderLynx, a mobile marketing and technology company.

The student team works with five faculty directors and a board of professional advisers

Since 2009, the DCVF has deployed more than $200,000 in investments. Returns on DCVF investments typically come when bigger companies buy the startups. At that time, the DCVF’s ownership and the value of that percentage based on the acquisition is calculated. The acquiring company pays the DCVF its share.

One goal of the DCVF is to accrue enough in returns to put a percentage of profits back into the CU-Boulder campus and programs in addition to maintaining the fund.

“There are a lot of mock competitions out there that give students the chance to think through scenarios and put their skills to the test,” said Chris White, director of outreach for the DCVF and a graduate student in both law and business administration. “But I think this is the only situation where students are investing real money. The possibilities are incredibly real.”

For more information about the Deming Center Venture Fund visit http://cudcvf.org/.

Contact:
Bret Fund, 303-492-1175
bret.fund@colorado.edu
Julie Simmons
julie@cudcvf.org
Chris White
chris@cudcvf.org
Dorian Ferlauto
dorian@elihuu.com
Elizabeth Lock, CU-Boulder media relations, 303-492-3117
elizabeth.lock@colorado.edu

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