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Students manage millions

Venture capital fund is valuable teaching tool

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Cole VandenAkker and Lauren Gibbs make preparations for the University Private Equity Summit, which begins today.

Cole VandenAkker and Lauren Gibbs make preparations for the University Private Equity Summit, which begins today.

Laura Seitz, Deseret Morning News

Ask Lauren Gibbs what makes an attractive venture capital deal, and the 21-year-old Westminster College student answers like a seasoned investment specialist.

No surprise.

Gibbs, a senior majoring in economics, is one of 25 Utah students who manage the $7 million University Venture Fund, a student-run venture capital fund that was raised entirely by students through outside investors.

Instead of reading about venture deals in a textbook, these students are making the deals — raising capital, performing due diligence and partnering with leading venture capital firms.

Students are expected to work a minimum of 20 hours a week, without pay, researching deals from offices on the eighth floor of downtown Salt Lake's Wells Fargo Center. Only one of every 20 students who applies for a position is accepted.

Today, more than 175 business students from across the country will descend on Salt Lake City to take part in the annual University Private Equity Summit, a conference organized by Utah students to promote entrepreneurship and to showcase the workings of their fund.

The three-day conference will feature a number of private equity fund experts and entrepreneurs like Ken Howery, co-founder of PayPal; James Lee Sorenson, founder of Sorenson Communications; and Mark Patterson, chairman of Matlin Patterson Asset Management, a $2.2 billion merchant banking distressed fund.

Dan Kimball, a senior at the University of Utah, was responsible for raising $90,000 to host the conference.

Ray Dardano, chief executive of UBS Bank USA, which invested more than $2 million in the fund, said he has watched the students mature as investors.

"This is a sharp group of people," Dardano said. "Like any intelligent person, you gain by experience. Just watching their maturity and their approach and listening to their experiences has been very rewarding for us as an investor."

Colin Mackey, a U. student majoring in political science and international studies, said he jumped at the chance to take part in managing a multimillion-dollar fund.

"It was something that you couldn't learn in school," Mackey said. "It was just an education in itself."

Mackey hopes his experience will lay the groundwork for admission to graduate school for a master's in business administration.

Cole VandenAkker, who in December graduated with a bachelor's degree in economics from the U. and also helps manage the fund, said a lot of times business students are confronted with myriad choices in choosing a career.

"This at least opens your eyes to what is out there and provides an unparalleled experience to work along seasoned professionals," VandenAkker said. "It allows you to do research that you maybe otherwise wouldn't do or get exposure to a market you weren't familiar with and then, in turn, we have a chance to invest alongside those partners in that company if we feel that it's a wise investment."

In 2005, the fund closed on eight deals, according to Jared Hutchings, managing director of UVF. Another 10 to 15 investments are planned, Hutchings said.

And just what makes a good investment?

"What I look for first is researching the management," said Gibbs, who already has one job offer from a California-based investment banking firm. "Management is one of the key things. Even if you have a great product, if you have poor management they can kill it really fast."

E-mail: danderton@desnews.com