What made Schilling Cider bubble up to the top of its class? In less than three years this innovative, earth-friendly company has become one of the top-selling hard cider brands in the Pacific Northwest, with national distribution. Colin Schilling and Mark Kornei, both Willamette University MBA graduates, launched their business in under six months from concept to product on the shelf and have watched it rise ever since.
As with any business, grit, determination and hard work had to play a strong role in the partners’ success. But Schilling and Kornei had something that most other fledgling entrepreneurs don’t have: first-hand experience in entrepreneurship through an angel investor program at the Atkinson School of Management.
“The Angel Investment class helped me immensely in getting my own business off the ground,” says Schilling. “I got experience in how entrepreneurship actually works, not just book learning. I learned what to do and what not to do, instead of learning it later the hard way.”
The Willamette University Angel Investment Fund is the first student-run angel investment program in the country. Since its inception in 2008, the program has exposed more than 200 students to the real-world challenges of entrepreneurship and made investments in 30 early-stage companies. It was ranked one of the top 10 entrepreneurship courses in the nation by Inc. magazine in 2011.
The yearlong course is multi-faceted, explains Debra Ringold, Dean and JELD-WEN Professor of Free Enterprise at the Atkinson Graduate School of Management. First, with funds raised from alumni, the school buys a spot for each of the 14 class members with angel groups and angel conferences throughout the region. “The students take part in these angel groups not as interns, not as staff members, but as full participants” notes Ringold.
Students work side-by-side with executives, business leaders and investors, developing strategies for investing in start-ups and learning the demands of entrepreneurship. Each angel group is pitched a lot of different deals, conducts due diligence and then votes on what to fund. By buying into the angel funds, the Atkinson School owns small shares of these companies.
Second, the students bring all the investment opportunities they see in their angel groups back to class. Every week, they discuss and evaluate each one. Over the year, the class analyzes 800 to 1,000 different deals. If they decide to invest, they choose the top prospects to present to an advisory board comprised of management and legal experts. Based on the students’ recommendations, the Willamette University MBA Angel Fund invests up to $50,000 in one or more of these companies every year.
The idea for the angel fund came from two Atkinson School professors, Rob Wiltbank and Wade Brooks, who wanted to find a way to teach students how to invest in start-up companies using all their MBA skills, introduce them to effectuation and make money for the school in the process.
A series of components came together to make the angel fund work. It started with professors who are experts in angel investing. Brooks, a Willamette University undergraduate and Atkinson School MBA graduate, was CEO of several start-up technology companies prior to being an angel investor himself. Wiltbank has extensive experience with venture funds. But on top of having experience “you have to develop a way to analyze businesses that you can teach to students,” explains Brooks, who is executive director of the fund.
Then, they had to figure out how, with administrative and board support, to build a vehicle inside of a university that can own private stock, hold it, and get returns on those investments. This challenge was easier for a private university than it would be for a public one, Brooks concedes.
Just as important, they had to raise money from alumni and friends of the school for the unique venture. Donors need to understand that their funds will be invested and are at risk, but also have the potential for producing income for the school. “This is an education program where donors can see tangible results. They can see the activity, they can see the learning, and that is exciting for them,” Brooks says.
Finally, they needed to find angel funds and conferences in which to participate. Since the school brings actual money to the table, they found other investors very receptive.
The course gives students the opportunity to become involved in a process to which they otherwise wouldn’t have access. “It allows them to work with accredited investors who are successful business people, build networks and make job connections. It also creates a learning environment where there are consequences to what they do,” Brooks says.
“When students first begin looking at companies, they think every company is the greatest thing they’ve ever seen. After they have developed objective criteria and learned to analyze a business, they see that most businesses are missing some fundamental things, and we wouldn’t get money back on our investment. That’s the growth of the student.”
Each class also follows the portfolio of early stage companies that have been funded throughout the life of the Willamette Angel Fund and makes a presentation to the fund’s Board of Advisors. To date, only two of the 30 companies funded by the school have failed, and at least one has been lauded as a major success. Zapproved, a start-up funded about six years ago, has returned cash and stock to the school, and was named the 16th fastest growing company in Oregon for 2015 by the Portland Business Journal.
With an average age of 24 and average work experience of about two years, this kind of hands on experience is invaluable for the students, Ringold says. “There are two great learning outcomes. It forces integration of core course work. They have to use accounting, finance, marketing, HR, everything they’ve learned. And it introduces students to fiduciary responsibility. They make decisions and experience the consequences of those decisions.”
Another important outcome, according to RIngold, is that the program allows students to be involved in the single most important economic development engine in the state. “Oregon is an incubator state and an innovation-friendly place, and the angel fund allows the Atkinson School and its students us to impact that economic development.”
The program has expanded since it started seven years ago. “We now look at more deals than any company in the Northwest,” says Brooks, “including deals in Washington, Oregon and California.” Brooks and Wiltbank have also added on-campus sessions featuring CEOs who speak to students on a confidential basis. “The CEOs talk about what really happens when a company is trying to grow, raise money, or sell. We look at successes and failures. Sometimes there’s a lot to be learned when someone goes through this process and it doesn’t work out.”
Just three years after graduating with his MBA from Willamette, Colin Schilling is already contributing in a positive way to the region’s economy. “I’ve started my own company and gone through fund raising successfully,” he says. “You learn as you go, but by taking that class I’d already learned more than most people who start their own businesses. I got a head start. “