Fabulous photo by Jordan Whitt

Catalyzing Young Careers in the Startup Industry ®

This is a not a guest post, but a personal one. The author, Andreas Saari, is the co-founder and CEO of Wave Ventures, the Nordics’ first and Europe’s largest student-run VC, and a Chief Matcher at Europe’s leading tech event Slush. He is enthusiastic about extreme sports, complex systems, languages and learning in general.

After founding Wave Ventures, I have been asked three questions more often than others: 1) What is venture capital? 2) Why do it as a student? 3) How does a student-run VC fund operate compared to a traditional one? As you might guess, these questions have come from very different groups of people with varying backgrounds. In the following, I’ll try to answer the first one briefly, the last one with a bit more in detail and the middle one in the process.

What Is Venture Capital?

By its simplest definition, venture capital means early-stage private equity investing. That is, venture capitalists exchange money for an ownership share of a company in its very early and therefore riskiest stage, and then help this company to grow and succeed — since that is now in both the investor’s and the founders’ best interest.

While for a founder, venture capital means giving away ownership of your company, it can also be a supercharger in the form of extra cash; fundraising enables startups to hire the optimal person right away, run faster than competitors, utilize unique industry experience and to show that the team has gotten at least some people convinced of their potential and capacity to develop in the future.

On a larger scale, despite being a relatively young industry, venture capital has been driving the US economy significantly for a couple of decades, and is making a change in Europe and the Nordics as well. Why? Due to its ability to make it possible for money to flow through some of the most forward-looking people into the projects and teams with boldest ambitions, most advanced technologies and fiercest, game-changing execution.

Making the Most Audacious Young Makers Work Together

The stereotypical, traditional VC fund is run by well-off adults, often times white males, who manage a pool of money raised from varying facets such as wealthy individuals, pension funds, insurance companies and funds-of-funds. So why join the game of sourcing deals, making investment decisions, managing the investment and working with portfolio companies as a student?

Actually, there has been some (not-very-scientific) evidence of student-run VC funds overperforming the VC industry as a whole. Yet for me personally, venture capital is about more. It is the mechanism towards which some of the most driven, curious, analytical, creative and optimistic people that I’ve come to know, gravitate — either to the investor side, or to the entrepreneur side.

Through founding and managing a student-run VC, I hope to make the following match: the industry gets more young, brilliant minds and fresh perspectives involved in solving the hardest problems on earth through entrepreneurship, and at the same time more and more of the young people get the chance to immerse themselves in the magical world of startups and venture capital.

On a more practical level, the concept of a student-run VC fund builds a two-way learning street. Our founders are our peers, and by working together with the most talented young people we as student VC’s get to:

1. Learn about the forefront technologies very fast, since we want to know what we’re dealing with and time is often limited to make a deal

2. Get exposed to the moonshot ideas of our time, and actually help in building them — often times in different industries simultaneously

3. Get to know the follow-on investors in the region and learn from them — and even have some of the best ones as our advisors

4. Learn the dynamics of fundraising

I simply haven’t come across a job with a steeper learning curve.

Below, I tried to find ways to distinguish between traditional and student-run VC’s operations, and this is the first version of what I came up with (all errors on my responsibility).

Monotonous? Hell no!

To make it really concrete, already now, after around 300 cases on paper, 70 face-to-face met teams and 2 investments, with the team we’ve gotten to utilize almost all the skills we have picked up so far in our lives — we have helped in designing a website and an architecture of a database, hiring the right photographer, planning a long-term strategy for market penetration and making a FOMO-creation for a future investment round.

I find venture capital to be one of the most powerful functions of our society, even though I do appreciate that it is not the optimal way to go for most founders. I think we should engage more young people in this learning-supercharger-of-an-industry in order to cultivate audacity, just-do-it attitude and effective solving of the meaningful, real-life problems.

I’d love to be challenged in my thinking, and am always up for a discussion around these topics (or any other ones, for that matter. I love talking to people.) To continue the discussion, reach out to me directly at andreas {at} wave.ventures, or follow @waveventures and @andreassaari on Twitter!

One last thing: recently I’ve been most excited about this fantastically educational article by Tim Urban on the human brain & Elon Musks’s new company called Neuralink. Definitely worth a read!

// Andreas