Angel Investment Challenge

October 3, 2013
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Student Reflection - October 2, 2013

This week I had the chance to participate in the Weekly Innovation Challenge. It is always a great opportunity to meet and network with new people from outside my field. This time, I was working with a junior mechanical engineer and a freshman aerospace engineer. Today’s event, the “Angel Investment Challenge,” was the first one I have been able to attend this semester. Our objective seemed simple at first, but the Weekly Innovation Challenge can often be deceptive. We were to watch a series of Kickstarter videos for new companies, and then we had to allocate a theoretical two million dollar fund among the companies in order to maximize our return. The goal was to pick the best projects and beat out the other teams with our investments.

Even if it was an investment competition, I found that his challenge required a wide range of skills. While some business training might have been helpful, my scientific background as a biochemistry major gave me a better perspective on some of the ideas. Likewise, my engineering teammates had little difficulty in seeing why one device or another might succeed or fail. Nonetheless, I realized that I was also biased by my background. The first project for a publicly operable space telescope seemed really cool to me, but my teammates were able to evaluate it more objectively. We ended up not investing in it, and we later found out the company collapsed with zero return.

Overall, my team used a number of techniques to evaluate the projects. While specific chemical or engineering knowledge was useful for ideas like a desktop fabrication system, the whole range of projects exceeded our combined experience. Instead, we tried to expand our thinking to also include more business-oriented concepts like demand and production. For example, some ideas like a new lighting system for bikes on dark roadways seemed interesting but were not worth funding because they had no manufacturing centers. Even simple clues gave us more insight into the projects. A few of the videos showed large design teams to indicate high levels of training and organization, but others were only the inventor making the advertisement from inside a home workshop. It was quite a challenge to combine all of these factors into our decision.

Ultimately, we needed to decide how to divide our money. It seemed fairly safe to spread out funding among several companies, but one of my teammates correctly reasoned that this low risk strategy would not set us above our competing teams. An average return could never make us the best. Instead, we settled on dividing our money among three projects: a pair of sports recording devices and a tabletop gardening system. This division ended up netting us more than four times our initial investment at the end of the challenge. Unfortunately, a pair of teams invested completely in a single project that we had rejected. They made a significantly higher return, winning the contest. Nonetheless, I was pleased with my team’s performance. Even if we did not win, we were still a group of scientists and engineers showing a good investment strategy. I also think our division of risk was an important and more realistic approach in which our entire investment could not fail with one company. In the end, my teammates and I showed that through collaboration, even people with little business experience can make new ideas work.

Winning Reflection - Steve Doonan

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