BYU Marriott’s graduate team for the 2017 regional Venture Capital Investment Competition (VCIC) had steamrolled through much of the event. But suddenly, in the final round—the round when team members meet with the judges—it seemed one of the judges had found a vulnerability in Holly Preslar’s investment plan and was out for blood.
“Funds typically take a 2 percent management fee,” says 2017 MBA grad Preslar, explaining the judge’s questioning. “But I’d said we were going to invest 100 percent of the fund. He was trying to get me to go down the rabbit hole of doing the math and calculating the management fee. He tried to trick us by changing the question around.”
Preslar cut the judge off mid-sentence, calmly explaining that team members had used a concept called recycling management fees, something none of the other teams had even considered, so the 100 percent investment was completely accurate.
The room went silent for a moment, and then all the judges smiled. Preslar had knocked it out of the park, and her team capped the extraordinary and relentless three days of competition by nabbing a second-place finish.
This is only one of many triumphant moments for a BYU Marriott MBA team that has become a perennial juggernaut at VCIC, repeatedly beating teams such as Dartmouth, MIT, Oxford, and Georgetown. After third- and fourth-place finishes early in the decade, BYU has gone first, second, and first over the last three years. In 2018, BYU Marriott even fielded its first team for the undergraduate VCIC—and that team too claimed first place.
If you were teaching business anywhere outside of Provo, you might wonder just what is going on in the Tanner Building. Why are BYU Marriott students so good at venture capital and private equity? How do they put together powerhouse teams year after year after year?
Cougar Capital
To answer those questions, it helps to start with BYU’s venture capital expert, professor Gary Williams. Before joining the faculty at BYU Marriott, Williams had run, bought, and sold several companies. After he sold his last company and scaled back to board roles at others, he came to BYU Marriott to pass on what he’d learned.
“I’d hired hundreds of recent college graduates over the years,” he says. “They were all smart, but they didn’t always have the tools to succeed in the workplace. I didn’t think they were getting enough experiential learning.”
Noticing that BYU didn’t have classes in early-stage financing for small to medium businesses, Williams started a venture capital class and an entrepreneurial strategy class in 2005. After seeing similar programs at Cornell and Michigan, he then founded a venture capital project for MBA students called Cougar Capital.
In Cougar Capital, MBA students oversee the search for new investments, due diligence, investment decisions, contracts, and even exits. To date, they’ve grown the fund to more than $4 million through investing in forty-four companies, about half of which they’ve exited. Those numbers have vastly outpaced the funds at other universities, and today Cougar Capital would qualify as a top-tier firm by industry standards. (Cougar Capital, it should be mentioned, doesn’t take the lead on deals; rather, it’s a syndicate partner.)
“Being involved in the VCIC competition was phenomenal,” says Dave Christison, a 2018 MBA graduate and Cougar Capital alum. “It’s an exercise in critical thinking: How do you analyze founders and companies based on limited data? How do you frame your investment decisions? How do you present those decisions to an investment committee? As I’ve gotten into the real world, those skill sets are paramount.”
Whether students are aiming for careers in venture capital or not, Cougar Capital is an unparalleled opportunity to understand how things operate on the front lines—where nascent businesses of all shapes and sizes go to find out whether they’ll sink or swim.
“As I started researching MBA programs, one thing that stood out about BYU Marriott was Cougar Capital and Gary Williams,” says Brad Hoke, who graduated with his MBA in 2016. “It’s rare that in a grad program you find a student-run venture capital firm that sees dozens of real deals each year and decides whether to invest in them or not. That is why BYU ended up at the top of my list.”
Today Cougar Capital is so popular with MBA students that the prerequisite classes actually require an application. Even the undergrads have decided to get in on the action. After finance student Adam Pulsipher came back from a summer internship with a venture capital firm, he wanted to continue what he’d been learning. “Venture capital is fascinating to me,” Pulsipher says. “I was looking for ways BYU students could make a splash on the national scene.”
At Pulsipher’s request, the faculty created and supported an undergrad venture capital–private equity class and student club. Much like their MBA counterparts, the undergrads don’t just want to learn; they also want to apply what they learn—and compete.
The Super Bowl of Venture Capital
Though BYU Marriott’s graduate team is a regular contender at VCIC today, Williams was initially turned down when he asked for an entry to the prestigious competition, where more than seventy universities fight for honors. The brackets were already full.
Then one year, a team backed out and BYU was granted the open spot. When the school’s first-time team came in third in the global competition, VCIC invited them back the next year; the BYU Marriott team returned and placed third. “Nobody’s ever done this,” the competition’s director told Williams. “Based on this performance, we’ll grandfather you in for a few years.”
VCIC, which MBA–JD candidate Erika Nash once compared to the show Shark Tank, employs a March Madness–style tournament. If a team wins the regional, it’s on to the global—or for undergrads, national—competition.
BYU Marriott does, in fact, enjoy a few advantages at VCIC. Before the regional, the teams compete in an internal round that includes first-year MBA students, something not all universities do. “The internal round is a ton of work,” Preslar says. “But Gary wants everyone to have these experiences, and it’s an incredible opportunity for first-year students to get involved.”
Once the BYU Marriott team makes it into intercollegiate competition, team members have another leg up, thanks to the school’s tight-knit alumni network. Teams are allowed one day to reach out for external information, and no one is more generous or helpful than BYU Marriott alums. The school’s teams also have templates and information from BYU’s past winning teams, all of which they draw on to play their best hand.
“People are willing to share what made them successful with the next team down the road,” Preslar says. “It has taken them a lot of work, but they aren’t stingy with what they created.”
At the end of the day, competitions such as VCIC—in addition to projects such as Cougar Capital and the undergraduate venture capital club—are about a lot more than winning a competition.
“These experiences offer some of the most significant learning at BYU,” says Taylor Nadauld, who began co-teaching the undergraduate venture capital class and advising the undergraduate venture capital club in 2017. “In terms of job preparation and exposure to real-life stuff, this is a highly impactful experience for students and demonstrates that they have a mastery. It’s not like memorizing formulas they can use on a test. This is the height of critical thinking.”
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By Michael Sackley
Photography by Nate Edwards
This story was featured in BYU Marriott's 2018 Annual Report.
