Investing at UpRound Ventures with Jonathan Zenkich
Background
Jonathan Zenkich is a University of Michigan junior studying business. He is the President of UpRound Ventures. UpRound Ventures is a student-led VC firm. I talked with Jonathan about how they make investment decisions, what value they provide to startups, how to join the internal team, and more.
Highlights
- UpRound Ventures can only provide money to University of Michigan students. They give grants ranging from $1,500 - $10,000. They’ve allocated $80,000 over the past four years and are looking to deploy $40,000 over the upcoming three semesters.
- UpRound Ventures is in the process of transitioning from grant-based funding to equity investments.
- UpRound Ventures’ value add to startups they work with is their breadth of experience. They have students representing every major at the University of Michigan. As a result, they can put together teams with students studying computer science, business, aerospace engineering, industrial engineering, etc.
- UpRound Ventures looks for students passionate about Michigan’s entrepreneurial ecosystem, who can provide value to the org, and who are intellectually curious.
Interview Transcription
Kieran: Hey Jonathan, thanks for joining me today. Do you want to introduce yourself?
Jonathan: Happy to. I appreciate you taking the time to speak with me. I’m Jonathan Zenkich. I’m a junior at the University of Michigan, studying Business. I’m originally from Illinois. I’m the President of UpRound Ventures, a student-run VC at Michigan. We source, fund, and accelerate companies on campus across southeast Michigan. I’m super excited to be talking with you today.
Kieran: How did you first learn about UpRound Ventures?
Jonathan: I had an interesting path. I did not come to Michigan thinking I was going to study business. I came in as a Political Science major, considering law school or government. I quickly found there was a disconnect between my expectations and classes. I imagined I would be learning hands-on skills that I could start using right away. But it was very theoretical. So, I looked around campus for ways to have a more immediate stake and impact on what I was doing. During my second semester on campus, I saw UpRound Ventures at one of the club fairs. I had always been a little bit interested in startups and thought startup investing was very interesting. I went to talk to the people running the organization and was fortunate to join. I have been going down the rabbit hole of VC since.
Kieran: UpRound Ventures is split into three operating pods — deal flow, fund, and accelerate. Can you give an overview of each?
Jonathan: It’s much like how a VC would look for startups and interact with them once they invest. We start in our deal flow pod, sending emails and attending events to find startups on campus and across Michigan and the Midwest. We are looking for startups that we can provide value to. We may provide value in our deal flow pod if we realize a startup is too far along for us. Too far along is still very early stage. It means they have revenue or are trying to raise more than $100,000. We’ll connect them with several investors in our network, especially firms in Southeast Michigan. This is a good option for student startups because we don’t take equity. Typically, the check sizes are between $3,000-$10,000. Most of our funding is from the school or external donors to keep the mission going of funding startups. We work with them in our accelerator pod once we fund a startup or find one we can support. We run 3-4 projects in the pod every semester. These students in UpRound work on a particular issue for a company, including go-to-market, web development, and product design. We are uniquely positioned to support in this capacity because we affiliate ourselves with the business school and the College of Engineering. We have a lot of people with different backgrounds and skillsets to help these startups grow.
Kieran: You’re looking at pre-revenue startups raising less than $100,000. What are other factors you’re considering before investing?
Jonathan: We write checks exclusively for current University of Michigan students. That’s part of our mission and a mandate we received from our donors, which includes the school and alums. We’re putting the money to work on campus. That part of the criteria narrows it down quite a bit. From there, we’re looking to find companies we believe will be venture-backable. That means we’re taking on some risk, hoping the company will achieve metrics and growth attractive to VCs at the Seed, Series A, and Series B stages. Recently, we were conversing with a company about their business model. They are doing a B2C sales motion. We thought a B2B motion might be better. From there, we thought through whether this should be more PLG-focused. So, growing from the bottom up or targeting stakeholders and decision-makers higher in the organization. The business model is something that we can tangibly think through. Given the startup’s stage, we don’t generally have a ton of metrics to work with, So we think a lot about things that pre-seed funds would think through, the business model, team, market, and how innovative the product and solution are.
Kieran: Can you give more background information on the money you’re investing from? It sounds like the school and alums are giving you some money. How much money do you have, what’s the frequency of investments, how much do you have to deploy, how does that all work?
Jonathan: We don’t take equity. When we allocate money to startups, we expect nothing in return. If a startup has a successful exit, we hope they may donate back to us. That is one way we have received money. Over the last four years, the lifetime of UpRound Ventures, we’ve invested around $80,000. We’re investing a further $40,000 during the upcoming three semesters, which is what we have to work with. We typically write 2-3 checks per semester, varying in size from $1,500 - $10,000. A big source of our funding is from the university. We work closely with all the entrepreneurship institutes, including the University of Michigan Center for Entrepreneurship (college of engineering) and The Zell Lurie Institute (business school). We have various deal flow partners, too. Some memos and introductions we’ve made to those partners have resulted in investments. When that occurs, those funds are happy and sometimes donate to our organization to keep the mission going. Those are our two primary funding sources; some alumni make small donations.
Kieran: So, this is really grants, not investments? Since you’re not expecting any equity in return.
Jonathan: Correct.
Kieran: What’s the investment process? How do deals get done?
Jonathan: The most exciting part of UpRound is how you can come into Michigan as a first- or second-year student and get a say in how we’re making investments. Typically, when a deal comes in that we’re interested in allocating money to, we will start by having some people in UpRound write a deal memo. They’ll meet with the founder multiple times and try to understand whether they have a strong conviction that we should allocate our time to this. We have weekly or bi-weekly meetings as a club where they will present their memo. Generally, there are 40-50 people at that meeting. From there, we have a 30-40 minute discussion and Q&A from the club to the people bringing the memo to the table. They will answer questions to the best of their ability. From there, we’ll do an initial survey of interest in the company. We’ll send out a form to all of our members where they can rank their opinions on whether or not we should allocate funds to the company. From there, the person who brought that memo into the club will look at that data, think about the questions from the initial meeting, and often meet with the founder again. If the club is aligned, we’ll go into a smaller discussion with the board and the members of the fund pod to make a final decision on that grant.
Kieran: What would you say is UpRound Ventures’ value add to startups in its portfolio?
Jonathan: I think UpRound Ventures’ value add is the breadth of experience that we can bring startups. We have students studying aerospace engineering, computer science, industrial engineering, business, philosophy, etc. Any major you can imagine on this campus has some representation in UpRound. As a result, we can put a team together on some of these projects that would be hard to put together elsewhere without spending a lot of money on hires. These insights that these pre-revenue, pre-product founders can receive from having our teams help them are extremely useful since they will often not get that from the circles they are operating in, where they may be focused on just the software they are creating or the product they are trying to design.
Kieran: Can you give an example of one of these consulting projects? What was the goal, and what did they accomplish?
Jonathan: In my freshman year, I worked with a company designing and producing a clean energy bar. They had a new blend of green tea caffeine and protein that was supposed to be a sustaining energy source. They were struggling with two things. How do we market this and set it apart from every other product, especially in our target audience, who could be college students, given where we are in our lives? How do we find a supplier and manufacturer to help us make this a reality? Those are two very different problems. I worked on the first problem, thinking through the marketing motion. We put on many events on campus and made materials for them to do that. An industrial operations engineer on our team worked on securing a supplier for them. They got that in motion and have been doing well since.
Kieran: What do you see as the biggest opportunities to improve UpRound Ventures in terms of how you support founders?
Jonathan: The biggest opportunity for us is transitioning to an equity investment-focused fund. I think we believe that could be a big opportunity for us because it creates a sustainable aspect to our relationships beyond just the people on campus at a given time. I think it is one of our problems, and I know others have faced similar situations. You’ve probably talked to some people who have this problem. We’re only here for four years. I will only be in this leadership position for a year or two. As a result, we constantly have to transition very productive relationships with founders and stakeholders to new people in the club. After four years, there is a 100% churn of our membership. Creating equity investments would hopefully allow us to sustain that more tangibly and give us more skin in the game to ensure we’re doing that correctly.
– now, let’s transition to questions to help students who want to join the UpRound Ventures internal team –
Kieran: Can you give an overview of when you recruit and the application process?
Jonathan: We recruit at the beginning of the fall and winter semesters. So, twice a year. Our recruitment process differs from the traditionally focused business clubs you might see on campus. I’m sure many people listening to this know what I’m talking about -- the consulting clubs where you might have a case or the finance clubs where you might run through some technicals. Our application screens for a few things: the people’s passion for the entrepreneurial ecosystem on campus, how they can add value to UpRound and the value that UpRound can add, and a general sense of intellectual curiosity. When we talk about who we will let into the club, we have these three things written down on a board. We want people who excel in these three categories. We have our application and recruitment process tailored to this criteria. We run into several in-person events where we get to know people applying better, such as a speed dating event or coffee chats with members. This way, applicants know what they are getting into and what they can look forward to. Our first round of interviews typically consists of behavioral questions that test what I mentioned. Then, we have a case interview where we allow people to look at a startup deck and walk us through their thinking as we guide them with questions. Then, we go into the second round of interviews, a group interview where we test a bunch of ideation, startup evaluation, and different skills. We want to see how people work together to think through problems that we’re all working together to think through.
Kieran: How do you assign students to the operating pods?
Jonathan: When a student joins, they list their preferences. Most people get their first choice unless we hit capacity. Everyone ends up in one of the pods they choose for a semester. After that, they have full mobility to move pods or go up in that pod to take on a leadership position and solidify themselves there. We are as flexible as possible. We know this is a student organization that people are volunteering to be a part of, so we want to ensure they get to work on what they want.
Kieran: As you onboard new team members to your org, how do you train them to work with founders, evaluate deals, and more?
Jonathan: We have a robust education semester for everyone who joins the club. You’ll meet weekly with two board members who run our education. They have extensive experience in VC and growth equity, working with and sourcing startups. They walk you through all the topics we think will be useful. You read a book called Venture Deals. I remember reading it, and it was super valuable and informative to what I learned that semester. Then we do a lot of interactive activities. Some alums come in over Zoom or in-person to teach more specific skills that we, as students, might not be qualified to teach. Part of it is also just getting integrated into the club, meeting with everyone through casual conversation and different activities so they feel like they are a part of this and can work well from there.
Kieran: Is there anything I didn’t ask about that is important to know if you’re considering UpRound Ventures as a founder or someone who wants to join the internal team?
Jonathan: For a founder working with UpRound Ventures, the most important thing to know is just the passion that everyone brings to this. We all come to these meetings super energized to help the Michigan ecosystem. That motivates us to keep working on this even with classes, group projects, job recruitment, and everything else our students have going on. For students looking to join, this has been the most formative experience for me. It enabled me to get my internship in VC, and I changed my major as a result. I’ve met so many people through it. I can’t recommend it enough, even though I am a bit biased as President.
