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Leveraging a Student Managed Investment Fund to Create Experiential Learning Opportunities for Students Outside of Finan

Leveraging a Student Managed Investment Fund to Create Experiential Learning Opportunities for Students Outside of Finance. by Dr. Thomas Gjerde and Dr. Russell Kershaw Clark H. Byrum School of Business Marian University Indianapolis, Indiana Contact (tgjerde@marian.edu). Preview.

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Leveraging a Student Managed Investment Fund to Create Experiential Learning Opportunities for Students Outside of Finan

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  1. Leveraging a Student Managed Investment Fund to Create Experiential Learning Opportunities for Students Outside of Finance by Dr. Thomas Gjerde and Dr. Russell Kershaw Clark H. Byrum School of Business Marian University Indianapolis, Indiana Contact (tgjerde@marian.edu)

  2. Preview Literature on Student Managed Funds (SMF’s) Venture Fund vs Investment Fund Planning and Implementation Leveraging the Fund Clark H. Byrum School Of Business, Marian University

  3. Literature • Lawrence, E. (2008). Student managed investment funds: an international perspective. Journal of Applied Finance, 18(2), 67-83. • 1969: 12 funds – 2008: 314 Funds worldwide, 289 U.S. Funds • Fund Size: $2000 to $62 million (Texas at Austin) • Sources: 28% from university endowment, 23% from a single large donor, 49% from various sources, including grants. • Average U.S. fund started with $414,000 in initial capital (2000-2007). Clark H. Byrum School Of Business, Marian University

  4. Literature • Lawrence, E. (2008). Student managed investment funds: an international perspective. Journal of Applied Finance, 18(2), 67-83. • 71% of U.S. funds are structured as a formal class. • Students are responsible for all investment decisions in 90% of funds. • 42% restricted to undergrads, 48% include both undergrad and grad students Clark H. Byrum School Of Business, Marian University

  5. Literature • Lawrence, E. (2008). Student managed investment funds: an international perspective. Journal of Applied Finance, 18(2), 67-83. • 82% of U.S. funds invested in common stock • 79% of U.S. funds have a diversification policy. • Several funds manage money of outside investors. Clark H. Byrum School Of Business, Marian University

  6. Literature • Lawrence, E. (2008). Student managed investment funds: an international perspective. Journal of Applied Finance, 18(2), 67-83. • 1997-Michigan created the first venture fund with $3 million • 6 schools followed, with Utah’s the largest at $18 million “A student managed venture capital fund offers the best opportunity in years to capitalize and profit from the research strengths of universities while enhancing the teaching mission.” Clark H. Byrum School Of Business, Marian University

  7. Literature What are the most important skills/qualities organizations value in a new college graduate? 1. Ability to work in a team 2. Leadership 3. Communication skills 4. Problem solving skills 5. Strong work ethic 6. Analytical skills (National Association of Colleges and Employers Job Outlook 2012 survey) Clark H. Byrum School Of Business, Marian University

  8. Literature Clinebell, J.(2013) Socially responsible investing and student managed investment funds: Expanding investment education.Financial Services Review 22: 13-22. The learning objectives normally identified for SMIFs include security analysis, teamwork, communication skills, and decision-making skills. Clark H. Byrum School Of Business, Marian University

  9. Student Managed Funds Investment Fund Venture Fund Clark H. Byrum School Of Business, Marian University Publicly traded securities Stocks, bonds, derivatives traded on an exchange Larger companies Liquid assets Valuation based on publicly available information No piggybacking required Privately held companies Equity stake, loans, revenue share Smaller companies Less liquid Valuation based on private information Piggybacking

  10. Student Managed Funds Investment Fund Venture Fund Clark H. Byrum School Of Business, Marian University Easy to measure returns during holding period Risk is easier to quantify No interaction with management National or global focus Difficult to measure returns during holding period. (milestones) Risk is harder to quantify Interaction with management Local or regional focus

  11. Planning and Implementation Clark H. Byrum School Of Business, Marian University • Budget • Technology Upgrades? • Professional meeting space? • Faculty? • Team with a practitioner? • Capital • Sources • Periodic additions • Payouts to scholarships?

  12. Planning and Implementation Clark H. Byrum School Of Business, Marian University • Advisory Board • Venture capitalists, attorney, lenders, etc. • Partners • Localstake, venture funds, venture clubs and organizations, Chamber of Commerce These groups will provide a flow of firms seeking funds.

  13. Planning and Implementation Clark H. Byrum School Of Business, Marian University • Class or Club? • Class may only meet once per year. • Club may operate throughout the year. • Combination may make sense. • Elective or required?

  14. Planning and Implementation Clark H. Byrum School Of Business, Marian University • Objectives specific to Finance • Most SMF’s don’t have return maximization as a top objective, although sustainability is critical. • Develop an appreciation for the link between business development and venture capital/general business funding • Understand and apply the tools of business valuation. • Develop fluency in the areas of valuation and venture capital. • Build relationships with finance professionals.

  15. Planning and Implementation Clark H. Byrum School Of Business, Marian University • Objectives beyond Finance Back to the National Association of Colleges and Employers Job Outlook 2012 survey - 1. Ability to work in a team 2. Leadership 3. Communication skills 4. Problem solving skills 5. Strong work ethic 6. Analytical skills

  16. Leveraging the Venture Fund Clark H. Byrum School Of Business, Marian University • Create mutually beneficial arrangements between campus and funded ventures. • Partnership provisions can be contractual, i.e. part of the funding. Growth companies need talent in many areas! • Internships • Student consulting • Class projects • Employment

  17. Leveraging the Venture Fund Clark H. Byrum School Of Business, Marian University • Create mutually beneficial arrangements between campus and funded ventures. • Public Relations • Public Relations/COM students create and manage an annual PR event. • Invite the board, chamber of commerce, local media • Highlight partnerships, jobs created, returns, etc. • Raise community awareness of the school, the fund, the business partners.

  18. Leveraging the Venture Fund Clark H. Byrum School Of Business, Marian University • Fundraising • A student managed venture fund attracts interest • Chamber of commerce • Banking • Local government • Entrepreneurs

  19. Conclusion Clark H. Byrum School Of Business, Marian University Literature on Student Managed Funds (SMF’s) Venture Fund vs Investment Fund Planning and Implementation Leveraging the Fund

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