When Business Students Become Angel Investors

Students take their places alongside business leaders and investment pros to decide which startup companies should get funding from angel investor groups.
When Business Students Become Angel Investors

WHILE MANY BUSINESS SCHOOLS give students opportunities to launch their own businesses, at Willamette University’s Atkinson Graduate School of Management in Salem, Oregon, we add another element to teaching entrepreneurship: We enable MBA students to act as angel investors who decide when to back a startup with real money. The course is one of several classes we offer in which students have to make decisions under uncertain conditions with financial resources that don’t belong to them.
I call this “consequential learning.”


Through the Willamette University Angel Investment Fund class, students have two chances to act as investors:

■ First, they take part in opportunities for angel investors. These opportunities include attending angel conferences—where they can see startups vie for funding, hear featured speakers, and participate in roundtable discussions—as well as becoming members in regional angel groups.

Because the school buys spots for them within each angel group, the students are full participants in the process—not staff members or interns. Working side by side with executives and business leaders, students have an equal opportunity to vote and voice their opinions. Each angel group evaluates many different pitches, conducts due diligence on the companies, and then votes on what to fund. Because it buys into the angel funds, the Atkinson School owns small shares of these companies.

When we sent our first student angels to their investment groups, we thought they would learn a great deal from the “graybeards” at the table. But it turns out that our students have such a robust evaluation process that many of the other investors rely on their assessments of potential deals. And that reliance has become a powerful force for student learning. Our students realize, “People are actually doing what I’m advising—I’d better be right!”

■ Second, each week students come back to class with information about all the investment opportunities they have seen in their angel groups. Over the course of the year, the whole class discusses and evaluates the 800 to 1,000 different opportunities they’ve learned about in order to determine whether the Willamette University Angel Fund should invest in them—independently of their angel groups. In fact, occasionally students have recommended startups that were not funded by their angel groups.

Every year, the students recommend one or two companies to the fund, presenting their top prospects to an advisory board made up of management and legal experts. To date, the advisory board has not rejected a student proposal; in fact, the board has invested up to US$50,000 in one or more of these companies every year. Between the companies that we buy into as part of the angel groups, and the ones we back through the Angel Fund, the school has invested in more than 30 companies. Whenever the school makes money on an investment, the dividend goes right back into the angel fund. Students also follow the portfolios of early-stage companies that were backed by the Angel Fund in the past, based on the recommendations of previous classes. So far, only two of the 30 companies funded by the school have failed, and at least one has been lauded as a major success. Zapproved, which was funded about seven years ago, was named the 16th fastest-growing company in Oregon for 2015 by the Portland Business Journal.


The idea for the Angel Fund came from Atkinson professors Rob Wiltbank and Wade Brooks. They believed the fund could allow students to draw on all their MBA skills as they learned how to evaluate startups—and it could make money for the school at the same time.

Both men are experts in the topic. Brooks, who is associate professor of entrepreneurial practice and executive director of the fund, was CEO of several startup technology companies prior to becoming an angel investor. Wiltbank, an executive professor, has extensive experience with venture funds. But when they started to design the Angel Fund, they faced several challenges.

First, they had to figure out how to build a vehicle that could own private stock, hold it, and realize returns on those investments—all from inside a university. Because the Atkinson School has successfully operated a student investment fund for several years, we were able to use that as a model for the Angel Fund. Even so, we realize creating such a fund probably was easier for us as a private university than it would be at a public school.

Second, Brooks and Wiltbank had to raise money from alumni and friends of the school to fund the new venture. They made it clear to donors that their money would be invested and at risk, but that it also had the potential for producing income for the school. The fund started with about $100,000 and now is worth just under $1 million. Donors like the program, according to Brooks, because “they can see the activity, the learning, and the tangible results.”

Finally, Brooks and Wiltbank needed to find angel funds and conferences where students could participate. Because the school was bringing actual money to the table, the professors generally found other investors very receptive.


The Angel Fund program was launched in 2008 with the basic structure it retains now, which admittedly is time-intensive. Inside the classroom, students meet formally with their teachers three hours per week for 15 weeks over two semesters. Outside of the classroom, students spend about 25 hours per semester with their angel groups.

In addition, they spend two Fridays per month in three-hour meetings with successful entrepreneurs and executives who discuss their experiences. In these sessions, CEOs talk to students about what really happens when a company is trying to grow, raise money, or sell. As Brooks notes, “We look at successes and failures. Sometimes there’s a lot to be learned when someone goes through this process and it doesn’t work out.”

Finally, students meet with the school’s advisory board twice a year to bring members up to date on the fund’s portfolio of investments and to pitch new investment ideas. Students who sign up for the course know they will be devoting a great deal of time to it, but they’re willing to dedicate the necessary hours.
Because we admit only a small number of students into the class per year, it’s highly selective. Students accepted into the program already have completed formal entrepreneurship coursework, have performed well in core courses, and are willing to invest that extra time. We just received the funding that will allow us to expand the program from 14 to 16 students for the 2016-2017 school year.

We already have expanded the program in other ways. We now look at startups based in Washington and California, as well as those in our home state of Oregon. The new students will work with an angel group in San Francisco.

The Angel Fund teaches students to be more savvy about what it takes to run a successful business.


The Angel Fund has produced several payoffs for our students—chances to build networks, make job connections, work with accredited investors, and above all, participate in a process they would not have access to otherwise.

It’s also taught them to be more savvy about what it takes to run a successful business. “At the beginning, students think every company is the greatest thing they’ve ever seen,” says
Brooks. “After they have developed objective criteria and learned to analyze a business, they see that most startups are missing some fundamentals, and we wouldn’t get our money back if we invested. That change in attitude shows the growth of the students.”

Because students in the program are relatively young—on average, they are 24 years old with two years of work experience—such hands-on learning brings about three invaluable learning outcomes. First, students are forced to integrate the knowledge they gain in core courses ranging from finance to human resources. Second, because they must make decisions with real consequences, they are introduced to the concept of fiduciary responsibility. Finally, they can contribute to Oregon’s thriving economy.

We believe that such “consequential learning” opportunities are vital to our students’ learning. In addition to managing the Angel Fund, students can work with organizations to redesign a website or create a marketing plan, manage our O’Neill Student Investment Fund, or start a business through our New Ventures to Launch Program. Students who have been through these consequential learning programs feel they have a head start when creating their own businesses.

For instance, three years after taking the Angel Fund class, Colin Schilling and Mark Kornei launched Schilling Cider, an earth-friendly hard cider product. Schilling and Kornei needed less than six months to take the company from concept to product on the shelf, and it has become one of the top-selling brands in the Pacific Northwest.

“The Angel Investment class helped me immensely in getting my own business off the ground,” says Schilling, who still routinely consults with his Willamette professors. “I got experience in how entrepreneurship actually works.”

Because the Angel Investment Fund has been so successful, we would like to start a similar program that would focus on the not-for-profit arena. We are talking with foundations about an approach that would allow students to develop their granting apparatus, gather and evaluate proposals, go on field visits, and award grants. We also plan to create a learning experience designed for students who want to go into public service. The program would pair students with legislators so they could learn how to create bills, go through the legislative steps, and experience success or failure in the process.

Ultimately, our hope is that every student at the Atkinson School has a chance to take part in a consequential learning experience. These classes teach students early in their careers that they must take responsibility for their actions, which we believe will make them attractive to employers. We take seriously our charge to educate the next generation of managers, and one way to do that is to give them hands-on experiences with real consequences. It’s even better if those experiences can impact Oregon’s economy in a positive way.


Debra J. Ringold is dean and JELD-WEN Professor of Free Enterprise at Willamette University’s Atkinson Graduate School of Management in Salem, Oregon.