The Bottom Line on Venture Capital

Students in Dr. Matt Ross’s undergraduate and MBA finance courses had the opportunity to learn about venture capital from an expert, Jeff Rinvelt, B.B.A.’91, principal at Renaissance Venture Capital Fund, member of the Michigan Venture Capital Association, and chair of the WMU Board of Trustees.

Rinvelt has a diverse background in venture capital and technology, along with experience working in various startup ventures. He is active in the Michigan startup community, volunteering his time to mentor young entrepreneurs, judge pitch competitions and guest lecture in classes. Rinvelt carves time out of a busy schedule to share his passion with WMU students.

The lessons that Rinvelt imparted were an excellent primer in venture capital and private equity, with a dose of straight talk about the industry.

10 key takeaways

1. Venture capitalists look for the best fit for their fund. Most businesses are not suitable for VC investment so it means saying no 99 percent of the time.
2. Venture capital plays a role in the expanding economy, but its role is to make good investments with good exit strategies for investors (typically within 4-7 years). They are a partner for a time, not forever.
3. When is the right time to seek funding from a venture capitalist? After you have significantly grown your business and are ready to take the company to a growth stage where outside investment makes sense. The sweet spot for venture capital investment is companies with more than $1 billion in total addressable market size. Many company founders seek funding from personal savings, family and friends, banks and other lenders, crowdfunding, angel investors and others before they are ready to meet with a venture capitalist. The stage that the business is in is very important to a venture capitalist, as is the potential market.
4. A sound business plan and personal credibility are crucial when seeking venture capital funding.
5. While traditional lenders may look unfavorably on a business that is funded by your own capital, a venture capitalist may have a different take on this. Investing in yourself means that you are passionate, committed and not relying solely on others to take you to the next stage.
6. As an entrepreneur, seek out  venture capitalists that are a fit for you. If you are in the life sciences, do not pursue a fund that avoids investing in that sector. You will get an automatic no.
7. Do not come in cold unless you have to—referrals are a good thing.
8. Remember, a venture capitalist’s job is to ask questions and be very skeptical, seeking a few optimal businesses for their firm to invest in, so keep that in mind no matter which side of the table you are on—entrepreneur or potential funder.
9. If you are a company founder, you do not have to know all the answers to the questions you will be asked by potential investors, but you need to know your industry better than anyone else in the room and be willing to find the answers to the questions asked of you.
10. The first step is getting a meeting with potential investors. The discovery and relationship-building stage can take many months.

Rinvelt’s talk helped WMU students contextualize what they would be learning over the next several weeks in their courses.

“Jeff Rinvelt is an influential expert who gave realistic expectations on how to be successful when starting or expanding your business,” says Kara Weberg, a junior majoring in finance. “He emphasized the importance of understanding the market, giving practical financial projections, and preparing a professional marketing plan. He also gave insight on what venture capitalists search for when choosing investments. I recommend business students interested in this field engage in future presentations.”

Sahana Madhanagopal, an MBA candidate, states, “The guest lecture on venture capital by Jeff Rinvelt is a must-attend session for all those with entrepreneurial aspirations. It was simple, lucid and very interactive, with students asking interesting questions and Jeff responding by quoting his own experiences on his journey as a venture capitalist. By the end of the presentation, we all had a good understanding of the opportunities and risks of being a venture capitalist as well as the milestones that must be achieved by a business entity so that it is attractive enough to get funded.”

As a member of the WMU Board of Trustees, Rinvelt is often on campus and gives back by coaching student entrepreneurs, interacting with business students, and attending events held at both the college- and University-level.

“We hope to make Jeff Rinvelt’s talks a regular offering for business students,” says Ross, assistant professor of finance. “Venture capital is an extremely important aspect of finance that often seems very exciting but rather foreign. Jeff cuts through the mystery of the venture capital process and really connects with students. Our students are fortunate to have an alumnus like Jeff making time to give back."