Fearing a brain drain as top MBA students fall prey to the money-and-power lust engendered by the bull market, B-schools across the country have been going all out to feed students' entrepreneurial cravings these days. From Anderson to Wharton, America's top programs have been offering dedicated programs of study in Entrepreneurship; and to add a little excitement to the mix, a number of schools even hold annual business plan competitions. What better way is there to teach entrepreneurship skills?

Well at UNC Chapel Hill's Kenan-Flagler Business School, they've put a new twist on the classic business plan competition. In this competition, the students are the one analyzing the business plans. The annual Venture Capital Investment Competition (VCIC) puts teams of b-school students from around the country in the VC seat. The National Finals for this year's competition take place on March 24-25 in Chapel Hill.

In the hot seat will be 25 real startup companies, vying for a piece of Kenan-Flagler's "mock investment pool." The students - winners of regional competitions held at Babson College, the University of Texas, University of Colorado, and U. Maryland - are competing for a $10,000 prize. Actual VCs from firms including Intersouth Partners, Intel Capital, Mid-Atlantic Venture Fund and Draper Atlantic will be judging both the startups and the students.

A little history
The competition is the brainchild of Jeff Reid, Executive Director of Kenan-Flagler's Center for Entrepreneurship and Technology Venturing, and Kenan-Flagler management professor Barry Roberts. "I was in my first year as Executive Director," says Reid, "and Barry and I came up with the idea for the competition as a way to teach our MBA students how to be venture capitalists."

They introduced the competition in 1998. Two teams each from four local business schools (Wake Forest, UVA, Duke, and Carolina) participated that year, and local VCs, including Intersouth Partners and Bruce Boehm (formerly of US Venture Partners), were a key part of the event. Local startups were asked to participate as case studies. The event "went really well," says Reid, adding that "everyone gave great feedback," which helped them plan the competition for the following year.

~ In 1999, the VCIC went national. Participating teams came from UNC, Wake Forest, Virginia, Duke, Southern California, Wharton, Maryland and Texas. This year, the Center for Entrepreneurship and Technology Venturing decided to hold four regional competitions, and host the final round at Kenan-Flagler. Conducting regional rounds, Reid points out, "decreases travel costs for the students, encourages them to network locally, and allows individual schools to participate more in the process."

The Center for Entrepreneurship specifically chose partner schools with "excellent MBA programs," specifically "excellent entrepreneurship programs." And of course, the host schools had to be "located in hotbeds of entrepreneurial activity - Boston, Austin, DC and Boulder." Reid "traveled to each regional host site last fall to conduct training sessions on how the competition works." He also attended each local competition "to officially sanction the event, and help with details, logistics and judging."

The case studies
The companies reviewed as part of the competition are all real startups looking for venture funding. Host schools usually partner with local entrepreneurial support organizations (such as the Council for Entrepreneurial Development) to recruit local startups. Local angel networks and venture capitalists also help find companies to participate. For the Nationals, Reid reveals, "we use companies that have applied to present at Venture 2000 in May. They use the VCIC as a warm-up." In fact, "in most of the regions, the companies use the competition as a way to get in front of some real investors, but more importantly, they get significant feedback on their business plans and presentations which they use in future pitches."

"It was hard to convince some companies to participate in the beginning," Reid admits. But once they recognized the opportunity the competition represented - "in the form of feedback from some of America's top b-school students and exposure to big-name venture capitalists," it was not hard to convince them to take part.

~ Real-life lessons
The benefits of participating in the competition are endless for everyone involved. Students get an unparalleled opportunity to flex their investment skills outside the classroom. Says Reid: "Using 'live ammo' in terms of real companies, as opposed to the written case studies that students are used to, means that we can't predict the outcome or prescribe an absolute right answer. That means every competition has different dynamics - and that's part of the beauty of the VCIC, and one of the reason students love it."

Students also love the instant feedback from some of the top VCs in the country, and of course the amazing networking opportunities. According to Reeves McGee, a student at Kenan Flagler and the media coordinator for the event, "each year students have gotten job offers from the Venture Capitalists." In fact, "two members of last year's winning team - from Kenan-Flagler - ended up as summer interns at one firm. And one student from San Diego State got a job offer from the VC he practiced [his presentations] for the competition with." Several former student participants have also joined startups as a result of their exposure to the companies reviewed in the competition. The Center for Entrepreneurship has plans to develop a 'Where Are They Now' section of the VCIC web site (http://www.vcic.unc.edu) that will follow both the students and companies that have taken part in the competition.

Opportunity knocks
Among the Venture Capitalists sponsoring the competition this year are Intersouth Partners, Alliance Technology Ventures, Charles River Ventures, and Fuqua Ventures. The Kauffman Center for Entrepreneurial Leadership, a foundation that provides two-year fellowships to students interested in VC careers. This year the foundation will be making an educational video about the competition and distributing it to B-schools across the nation. Other sponsors include The Council for Entrepreneurial Development, the National Venture Capital Association, KPMG, and Vcapital.com.

To increase opportunities for participating students, the program founders are publishing a resume of this year's student participants as a take-home for the VC judges.

Stay tuned - in a few weeks we'll be featuring an interview with members of the winning team.