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University of Missouri

Student Angels in the Investing Field

Students use donated money to make real investments in startup companies.

The Dow Jones Index will rise another 10 percent in 2015. Back to the Future’s Lea Thompson will win Dancing With the Stars. The Cubs will win the World Series — next year.

People make predictions all the time, but they tend to remember only the ones they got right. Kansas City‐based Knoda helps keep score. The website and smartphone app lets people make their predictions public and track their results.

The students managing the Trulaske College of Business’ Allen Angel Capital Education Fund are predicting — to the tune of $50,000 — it will be a hit.

Clay Finley and Curtis Strubinger, both MBA students in the Trulaske College of Business, lead the Allen Angel Capital Education Program class. Students manage a $550,000 investment fund and learn to evaluate early-stage startup companies, negotiate investments deals with them in exchange for partial ownership and monitor their investments over time.  Photo by Rob Hill.

Clay Finley and Curtis Strubinger, both MBA students in the Trulaske College of Business, lead the Allen Angel Capital Education Program class. Photo by Rob Hill.

Everyone has that friend where you say, ‘I wish this guy would get on [Knoda] because he’s wrong so much and never admits it,’ ” says Curtis Strubinger of Weldon Springs, Missouri, a master’s student in accounting and one of two student leaders in the angel investor class.

Strubinger and the 20 students in the class act as managers of the angel fund, a $550,000 pile of money put together through alumni donations, outside grants and university support. With it, the students gain real‐world experience at angel investing — investing in early‐stage startup companies. They search for promising startups, research the companies and the markets they’re in, negotiate deals to buy an equity stake in companies they like, and monitor and mentor the companies they’ve chosen.

The class is composed of students from many disciplines, such as engineering, journalism and agriculture, who bring their diverse expertise to bear. Far from being get‐rich‐quick dreamers, the students have been as cautious as if they were investing their own money, says W.D. Allen, assistant professor of finance, who has taught the angel investing course since its start three years ago.

During that time, the students have looked at about 70 companies but only invested in three — Elemental Enzymes, EternoGen and, in May 2014, Knoda. “We’ve kissed a lot of frogs,” Allen says.

Even when a deal doesn’t come to fruition, the exercise of researching and evaluating a company is a valuable one. The companies the group looks at range from software to biotech to medical. “[Although] all businesses have a revenue model and a marketing scheme, there’s so many things that are unique,” Strubinger says. “It’s cool to learn more about them and learn how to learn — learn how to research and fundamentally think and analyze those [companies].”

Whether or not the investments pay off for the angel fund, the skills the students have gained are already paying dividends in their careers.

Clay Finley of Prairie Village, Kansas, is a master’s student in accounting and leads the class with Strubinger. Finley has already accepted a job at an investment bank in Chicago for after he graduates in May. “My familiarity with the financial jargon of evaluating a company, of dealing with financial statements and the experience of talking through investments was, I think, one of the main reasons I got the job,” he says. “It was something a traditional classroom couldn’t provide.”