VC for a Day

What it takes to win a VC competition

The Venture Capital Investment Competition is the world’s largest VC competition, where graduate students get to play the role of VCs for a day. Teams go through a simulated VC process, with real startups pitching and VCs as judges. It’s a lot of fun and a great way to immerse yourself in the VC world and build some connections.

Teams receive three startup pitch decks about 40 hours before the competition begins. During this time, they are allowed to reach out to their network and conduct due diligence. The competition has three rounds:

1. Each team gets 15 minutes to go through due diligence questions with each of the three startups
2. Each team presents their investment decision and strategy to the judges in the form of a partner meeting (you have to invest in one of the startups)
3. The top teams advance to the final round which involves presenting the entrepreneur with a term sheet and negotiating a deal

My team at Rice Business recently won the Central Regional Finals at UT Austin. Not only did we get to go home with some pocket change, but we will also be competing in Global Finals in April. This was how we prepared:

December

At some point in the haze before finals, I submitted an application to represent Rice at VCIC. Many schools will hold an internal competition to choose a team or individual team members — Rice might be leaning this way after our success this year.

January

We met as a team for the first time and decided on a prep strategy. We developed a due diligence checklist to go through for each startup, and did a few mock sessions with local startups we were personally connected with. We approached local angel investors and VCs to attend some of these sessions and give us feedback. Through this process, we were able to get into the investor mindset and build connections with these investors.

February

We finalized our checklist and scheduled times to touch base with our VC mentors during the competition. VCIC only recently allowed teams to use their network to gain insights on the companies, which makes sense, because this is how real VCs function.

Week of the Competition
Our team drove up to Austin before the pitch decks are released so we could make the best use of the 40 hours we had to gather information on them. Our startups were in three very different industries: fitness, farming, and e-commerce. However, all three were dual-sided marketplaces, so they faced many of the same issues. We harnessed our collective network and spoke with urban farmers, with fitness trainers, and with luxury brand marketers.

Every couple of hours, we had a call scheduled with one of our mentors, who gave us their unique perspectives and talked through our concerns with us. By the end of the day, we had already decided which startup we were going to invest in, barring any major concerns that came out during the due diligence session.

Day of Competition

This day was a blur. I felt like our team was thoroughly prepared for the due diligence sessions and got all the answers we needed out of the entrepreneurs. The partner meeting was definitely the most terrifying part of the whole experience, because the real VCs get to criticize your investment decision and you have to be able to defend your choices. By the time the negotiation session rolled around, our team was mentally exhausted. We didn’t get to a deal with the entrepreneur, who was concerned about our proposed valuation, but teams aren’t penalized for not closing. In the end, we walked away with both the big awards: first place and entrepreneurs’ choice.

Big takeaways

• Our strategy was equal parts style and substance. In the first few minutes of every session, we set a clear agenda and demonstrated our value and expertise as VCs — the judges really seemed to like this.
• This competition is about prep and practice. If we had come to the competition without having developed our due diligence checklists or doing mock sessions beforehand, it would have been extremely challenging to work out the kinks in real-time.
• Making connections is more important than winning. We built much stronger connections with local VCs by asking for their mentorship for this competition than we did with the VCs that actually judged the competition. Regardless of the outcome, simply by entering the competition, we had managed to break into the VC network.