A few moments ago, we ended our first meeting with a team of entrepreneurial students- Itai, Shachar and Chen, Computer Science, Management and Psychology students at Ben Gurion University. The team has been working for several months and they have reached an important moment in the life of any startup venture. A moment of “Fight or Flight”, in which without funding it is impossible to continue working. We, the team of analysts, use the vast amount of knowledge we have gained in our training to best assess the team and the venture presented to us. Our smiles at the end of the session gave us away, and it was clear to them that we are excited about the idea. The thing that they do not know is that alongside the enthusiasm there’s also a sigh of relief, since the concerns that accompanied us for a brief time were finally gone...
But why should an analyst team have concerns before meeting student entrepreneurs?
To answer this, I will introduce you to Ben-Gurion University’s unique venture capital fund, Cactus Capital.
Cactus Capital is the first venture capital fund (VC) in Israel that is run entirely by students and invests in the projects of students and fresh alumni of Ben-Gurion University.
To create the fund where students would be able to choose the start-ups to invest in and guide them down the road, a unique training process was needed. The goal was to give students from diverse backgrounds the skills required for VC analysts. To that end, analysts from a variety of university faculties, including myself, have been trained by the VC — fresh.fund. In the course, we learned the entrepreneurial world from an investor’s perspective, then refined the complex process into guidelines, so that we won’t miss the next exit that goes around campus corridors, just below our noses.
You will not be surprised to hear, but Ben-Gurion University is growing quite a few of those opportunities. Entering the PitchBook, a ranking that lists the top 50 universities in the world for alumni raising capital for startups, only reinforces the initial thought of the fund — there’s great human material here, and we’re here to track it down and help companies grow.
Cactus Capital is part of the “360° Entrepreneurship Center”, Ben-Gurion University’s new Entrepreneurship Center, which is responsible for a variety of activities in the world of entrepreneurship and startups on campus. A new Oazis Accelerator in collaboration with IBM AlphaZone, workshops, and many other diverse programs. For more details go to the link.
So where does that concern come from? First, because we took on a BIG challenge on our shoulders. Second, like entrepreneurs, we’re also students and most of us inexperienced in the venture capital world. For all of us, this is the first time we have met our classmates in a situation in which we are examining them, and the desire to apply everything we have learned has led us to a sense of vigilance and tension.
But if we jump a few months ahead, to March 2020, when investments in 5 amazing startups are behind us (and 9 more from earlier semester) — we can wholeheartedly say that concern is a distant memory, and doubts have been replaced with a tremendous sense of satisfaction. Now after finishing yet another application process for next investment round this summer , we want to share what we went through and what we learned from the first round of investment. I know You will find plenty articles titled “What Venture Funds Look For in a Startup?” by doing a quick Google search, but here I will present the process from a student analyst’s unique perspective, giving you a small glimpse of what it takes to be an analyst at this fund.
The analysts at Cactus come from a variety of different faculties in the university. I study statistics and economics, those who study mathematics, collected psychology and the list goes on — medicine, various engineering, business administration. This diversity is unique and gives us a wide range of content because at any given moment I know I have someone to consult with about a company I’m leading through the process of investment.
When the issues are very complex and we feel that the studies have not yet provided us with the right tools, we take another advantage of Cactus, which is the fact that we are part of Ben Gurion University for all intents and purposes. The Professors and researchers are at our disposal and always happy to help, whether to help us accurately understand the venture facing us, or to guide and advise the startup itself. From this it can be understood that to function well in Cactus Capital it is important to be a team player. Always be open to innovative ideas, know in what areas you should seek help from friends, and not save your knowledge from others when they need it. Modesty and teamwork also guide us in our decision-making process, with the start-ups meeting us in a limited pool of 3 analysts. The dilemmas and decision-making we keep to the full staff forum and invest a lot of time in deliberations and consultations with experts.
We broadcast our unique shade of cactus to the entrepreneurs we meet. For most of them, this is the first experience in the process of raising an investment, and we understand that it is our responsibility to help them lower the stress level, which is made possible by the fact that we, too, are students just like them, and some of whom we even know to some degree. Therefore, the atmosphere in the fund’s meeting with entrepreneurs is pleasant and perhaps a little more friendly than a regular VC, but this does not mean that the standards that are expected of entrepreneurs go down. At the beginning of each session, before we even dive into the idea of the venture, it is important for us to get to know the team in front of us.
“I don’t know my partner in the venture so much, but he said he is an excellent programmer and that’s exactly what I needed.” why? Because if you are serious and really about to embark on the challenging, long and uncertain journey called “Establishing a Start-up”, you are going to spend a lot of time together, and a good relationship between entrepreneurs is necessary for the success of the company. Positive dynamics will be reflected in effective communication between team members, clear division of work and willingness of all team members to invest in the venture.
A fundamental difference between cactus and a regular VC in front of you!
Funds that invest in more advanced stages of a startup’s life chain will usually find it easier to trace the professional experience of team members, and they will always be pleased to find that the CEO who has faced them has already taken part in the startup. Cactus, as you already understand, invests in people in their early stages, sometimes even in the idea stage. So, discovering that entrepreneurship was already a startup in the past is usually an extraordinary privilege for us. Most of the projects set up by students are built by people who are during or immediately after their degree, and they take their first steps in this field In these cases we turn the hurdle into an advantage, utilizing the social and professional connections of each and every one of us within the university campus, to understand well who is the entrepreneur we meet with.
Remember the cozy atmosphere we talked about? It always plays in our favor here, as it allows us to have an honest and authentic conversation with the developers.
It may be that during the reading, you got the feeling that we were diminishing the value of student entrepreneurs, but believe me, I learned during my time at Cactus that there are some significant benefits for a student who wants to start an entrepreneurial course. Students have plenty of free time, a great hunger to succeed and a vast variety of minds in their immediate vicinity. And if you were wondering, fear of failing is not at all in our lexicon at this stage of life. We are looking for this combination with the companies that come to meet us!
The idea is already in your mind and you are starting to submit the required documents to send to the cactus. It’s time to show us that you understand the magnitude of the challenge that lies ahead of you and that you can accomplish it. We don’t want you to give up on the test period and to abandon your studies, but we do look forward to seeing how strenuous work on the venture fits into the schedule; We will completely understand if at this stage you are unable to write the entire system code yourself, but will require long term planning and the search for the right people to join the team; A flawless business plan probably won’t be put on the table at the first meeting, but you have to think about how the company will make a profit, and in large dimensions (yes, dreaming big is one of our favorite things). Cactus is the VC that will give you a chance to make a mistake in front of it, allow you to consult at any moment, and at the same time give you all the tools and expect you to use them to grow and learn from the mistakes, along with us.
The diverse team, the special approach Cactus operates and the surrounding area here in Be’er Sheva were translated into more than 100 investment requests last semester, of which we met with about 50 companies and examined in-depth, and we ended up investing in 5 companies (joining 9 portfolio companies from the previous rounds). With each of these 5 companies, we enter a close relationship where we give companies all the benefits of the surroundings in which we operate. A variety of consultants, from both academia and industry, accompany the VC and support this desert project, and they provide tremendous added value to our companies. After getting the impression that the idea is excellent and that we can fully trust the entrepreneurs we have invested in, we are going to help them as much as possible on their way to becoming the next big thing.
So if you are a student or fresh graduate of Ben-Gurion University and you have a dream in the drawer, or an idea that you know is the real deal — the first step begins with a Cactus Capital. see you later.