MBA candidates also write business plan for a College of Architecture-related venture
The economy hasn’t exactly been kind to venture-capital investments in Texas. So imagine, if you will, a private-equity fund run by University of Houston students to help UH-affiliated entrepreneurs solve their cash crunch.
In a Spring 2011 class at the C. T. Bauer College of Business, 12 MBA candidates did just that. Students in a special-projects course taught by Professor John Reinert turned out a fastidiously researched, 51-page business plan for a Bauer-operated venture-capital fund. Cougar Ventures, as the theoretical fund is named, would operate much like the Cougar Fund, the 9-year-old private-investment portfolio managed by Bauer grad students. “Unlike other existing student-run funds in other parts of the country,” the business plan states, “Cougar Ventures aims to provide competitive, real returns to its limited partner investors.”
Reinert credits Mike Young and Roberta Skebo of the UH Small Business Development Center (SBDC) for coming up with the idea. His students just ran with it. Though much work remains before Cougar Ventures could become a reality — one student suggested another special-projects class might be needed to continue the study — Reinert’s group says the venture-capital fund would help university stakeholders start businesses that might otherwise remain on the drawing table.
“It’s an opportunity to give something very tangible and meaningful back to the university,” says Reinert, who is enlisting his students to draw up business plans for other university-affiliated endeavors. (MBA candidates in Reinert’s summer course are working on a “live” consulting project to create a business plan for a College of Architecture green initiative.)
Alan Schoephoerster, a Bauer grad student who worked on the Cougar Ventures analysis, says the fund would provide students with a rare educational opportunity — and bring prestige to UH. “There are only a handful of student-run, private-equity funds in the United States, and this would be one of them,” says Schoephoerster, a commodities broker at Choice Power who expects to earn his MBA with a Finance concentration in August. “A fund like this draws a lot of attention to the business school and to the student body.”
As part of their research, the students chronicled the decline in venture-capital funding in Texas, which is down 40 percent to 50 percent drop since 2009. To help them weigh the legal, ethical, organizational and operational considerations of managing a private-equity fund, Reinert brought in guest speakers — including Finance Professor Tom George, director of the AIM Center for Investment Management, which manages the Cougar Fund; Ned Hill, managing director of DFJ Mercury; Walter Ulrich, president and CEO of Houston Technology Center; Jones Day attorney Michele Gibbons; and Vincent D. Foster, chairman and CEO of Main Street Capital. Having access to such high-caliber professionals was a major bonus of the project, says class member Jason Scholtz (MBA ’11).
At the end of the course, Reinert’s students were optimistic that Cougar Ventures could eventually become operational.
“Honestly, this fund can and will work,” Schoephoerster says. “There is too much demand for this type of investment vehicle, and given that the fund will be created by and for University of Houston students and alumni, there should be no shortage of stakeholders interested in seeing the fund succeed.”
But Scholtz and Schoephoerster say the fund will need a mentor figure. “Somebody really has to champion this,” says Scholtz, a commercial real estate executive at Colliers International. “Somebody with experience. Somebody who wants to see it off the ground. Finding that person is going to be key.”
Meanwhile, Reinert’s summer class is devising a business plan for Metalab, a College of Architecture-affiliated venture that designs products for the university’s Green Building Components applied-research program. Metalab is developing an affordable, self-irrigating raised container, called the gro-Pod, for home gardeners, and the 12 MBA candidates have been talking to customers, conducting online surveys and visiting retailers such as Lowe’s and The Home Depot.
“This plan will be used as a roadmap to introduce and market the product,” says class member Vijay Dontharaju. A consultant for British Gas, Dontharaju says the raised bed has great potential for retail and commercial sales, and is particularly ideal for rooftop gardens. “It’s easy to use, it is durable, and it has a unique design, which really makes it stand apart from its competitors.”
By Wendell Brock