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COLUMBIA, Missouri — Students who’ve earned a spot in the competitive Allen Angel Capital Education Program (better known as the AACE Venture Fund) get a one-of-a-kind opportunity to test their acumen as investors — leaving the classroom to face (and potentially fund) startups in the real world, Carson Lujin said.
“The AACE Fund takes all the technical knowledge you’ve learned in a regular class and actually puts it into practice. We are making investment decisions based upon analyzing the market, the startup, the financials, potential returns — all in a real-life scenario,” said Lujin, an accounting graduate student at the University of Missouri who serves as managing co-director of the fund.
Click here to learn more about the Allen Angel Capital Program.
The structure of the course is far from traditional, noted William D. Allen — an adjunct professor at Mizzou who founded the AACE Fund in 2010.
“I was a full-time faculty member in the finance department when two former students of mine told me that they wanted to start an angel investing club on campus,” Allen recalled. “Well, their enthusiasm was contagious. We started like any other entrepreneur, trying to come up with a way to do this and raise funds.”
Mizzou required that the students raise $25,000 to be qualified for four semesters of a trial course. Understanding that there was only $25,000 standing in the way of an incredible opportunity, Allen funded the class, he shared.
Catching momentum shortly after taking off, the Ewing Marion Kauffman Foundation awarded the AACE Fund grant money. The fund has also received donations from Shelter Insurance, alumni and individual donors.
“How much we’ve grown and developed this program was not planned,” Allen admitted. “But it’s very exciting. The students run the show. There’s no official textbook; there’s no lectures; there’s no exams; there’s just jumping into the deep end of the pool and doing everything imaginable.”
Since the program’s inception, students have invested in 13 startups — with investments up to $50,000 per company. One startup has had a successful partial exit, and several others are growing rapidly, said Gary McKinney, an entrepreneur and advisor to the AACE Fund.
“These students are really amazing. They are going on to work at large investment banks like J.P. Morgan, Goldman Sachs, Blackstone,” McKinney raved. “They’re smart, but they’re also capable socially. They’ll reach out to entrepreneurs and invite them to pitch to the class. The students really do all the work. I’m just there to provide my perspective as someone who’s invested in several different angel deals.”
“A number of our students go on to work at startups as well,” Allen added.
The final investment decision is also completely up to the students, Allen and McKinney said, noting that it takes two-thirds of the class to vote on an investment — and only students get a vote. Any money earned from an investment goes directly back into the AACE Fund.
“We are always learning because no two companies are the same,” Lujin said, noting that AACE Fund students will also tap into other departments within Mizzou to complete their due diligence and research before investing. “… I’m an accounting student; so if a biomedical company is pitching to us, we can leverage the resources at Mizzou and the teachers who’ve done research in that space.”
Students from all majors are invited to apply to the program and are required to be in the course for two semesters — but most students take it for a longer span, Lujin added.
“What I’ve seen from my time [with the fund] is that the applications are getting stronger and stronger, and we are getting more applicants,” Lujin said. “It’s definitely a very competitive process, but it is a testament to how valuable this program is.”
Earlier this month, the students visited Kansas City to meet with professionals at KCRise Fund, Five Elms Capital and the University of Missouri-Kansas City. During the trip, they also heard pitches from 10 local startups, including: VRDojo, Come On Now, Venboo, Dodgeball, Crib Coaching, Veeper, Vetellience, Splitsy, MyANIML, and UpDown NightLife.
About 100 students have gone through the AACE Fund program since 2010.
“All those students have been able to put that they’ve worked as an investment analyst on their resume, which is very unique for students,” McKinney said. “I do believe that this class gives them the most experience and ability to land that good job.”
Brian Baker, an accounting graduate student and co-director of the fund who is expected to start work at Five Elms in January, echoed McKinney.
“AACE helped me develop an investor mindset and formulate my own opinions,” Baker shared. “It helped me get involved in the startup community and even impacted my future career.”
The AACE Fund has already deployed a majority of its approximately $700,000 from Fund I, built largely from charitable donations. The class has an active fundraising campaign for Fund II, with a goal of raising $500,000.
“I hope to see this program and its impact continue,” Allen said. “I get emails from people who are four or five years removed from the class and they want to bounce something off me or just want to say, ‘Thanks. You gave me something that directed my life.’ And I’m so happy to hear it.
“It’s bizarre. I haven’t had a complaint yet — and I try my damnedest to get them,” he teased, smiling.
Click here to make a donation to the AACE Venture Fund.
This story is possible thanks to support from the Ewing Marion Kauffman Foundation, a private, nonpartisan foundation that works together with communities in education and entrepreneurship to create uncommon solutions and empower people to shape their futures and be successful.