Investing at RedHawk Ventures with Katherine McIntosh
Background
Katherine McIntosh is a junior at Miami University, studying finance and marketing. Katherine joined RedHawk Ventures in January 2022 and now serves as the Co-Managing Director of the organization. I talked with Katherine about what RedHawk Ventures looks for in student founders, the investment process, and how to join the internal team.
Highlights
- RedHawk Ventures’ fund is almost entirely distributed, with room to make one more investment. They are in the process of raising a larger $1.5 million fund.
- RedHawk Ventures typically invests $25,000 via a SAFE. They plan to increase the max check size to $50,000 with the new fund target.
- RedHawk Ventures investment process takes 3-6 weeks. After startups fill out a pitch form on their website, it starts with a meeting with the Co-Managing Directors and Investment Director, followed by their due diligence team researching and evaluating the deal.
- RedHawk Ventures recruits new internal team members each semester but recommends you apply in the Fall. Katherine notes they seek students who can articulate why they are passionate about venture capital, entrepreneurship, and working with startups.
Interview Transcription
Edited lightly for clarity.
Kieran: Thanks, Katherine, for joining me today. To kick us off, do you want to introduce yourself?
Katherine: I’m Katherine McIntosh. I’m a junior at Miami University in Ohio. I’m currently studying finance and marketing. I’m presently the Co-Managing Director of RedHawk Ventures.
Kieran: How did you first learn about RedHawk Ventures?
Katherine: So, it’s a student organization here on campus. Our former Managing Director, Abigail Bartlett, came to one of my classes first year and pitched it to our whole class. It seemed super exciting, and I ultimately applied and got involved that way.
Kieran: I could learn some background information on RedHawk Ventures from the website. It’s a student-led venture fund that invests in Miami University students, alumni, and startups in the Midwest. Is there any other background information that the audience should know?
Katherine: I think you hit it right on the head. We’re actively raising our second fund of $1.5 million, and we just transitioned this year from primarily only students and alums to all of the Midwest.
– let’s start with questions directed to help student founders considering RedHawk Ventures –
Kieran: What do you look for in student founders before investing?
Katherine: In particular (we invest in) students who are passionate and motivated about what their startup is solving. The chemistry between the founders and the team as a whole (matters). It can be a little ambiguous whether a student at such a young age has enough experience. But as long as they are solving a problem they are passionate about, not just answering the question to a problem, I think ultimately is what we look for in student founders that we’re investing in.
Kieran: What does the RedHawk Ventures investment process look like? How do deals get done?
Katherine: So, it usually starts with a referral, whether it’s students on campus hearing about the organization or former members letting people know there is a pitch form on our website that they can fill out and enter our pipeline that way. My fellow Co-Managing Director and our Investment Director sit down with the founders, hear their pitch, and see if it’s fit to enter our pipeline. We assign a diligence team to complete the research to see if it suits us as a student fund to invest. It starts with us and ends with students researching before making an investment decision.
Kieran: How long does that process usually take?
Katherine: It can be between 3-6 weeks. As students, we only function during the semester, so we have to fit a lot into the four months we have on campus each semester. So, it depends on the timeline for us and the startup.
Kieran: After the initial conversation with the Co-Managing Director, you mentioned this diligence team. Is that just another series of discussions? Or what does that look like?
Katherine: So, we have a diligence team lead and a fellow analyst. (These students) are more of the general body members of the fund. We’ll pass off any information (from our initial meeting). New members go through a new member education process. They learn what we evaluate the company on. So, they’ll complete that evaluation, do a lot of research in that 2-3 week timespan, and ultimately present what they found and whether we should invest. If it’s a yes, then it goes through the investment team to say yes or no officially. So, there are a lot of steps, but the diligence process is just for investment analysts or general body members of the fund.
Kieran: What is your typical check size, and what are the terms?
Katherine: Our typical check size is $25,000 and financed through a post-money SAFE agreement. With fundraising for our second fund of $1.5 million, we’re looking to up that check size to a $50,000 max check size to have more of an impact on these startups.
Kieran: You negotiate terms with every startup?
Katherine: Yeah, following along with other investments in that round. It’s more on a need basis. We don’t have standard terms for each startup.
Kieran: How many investments do you make per year?
Katherine: We try to make 3-5 investments each year, leaving like 2-3 each semester to ensure we have enough pipeline for general body members to complete diligence each semester.
Kieran: What would you say is RedHawk Ventures’ value add to startups in its portfolio?
Katherine: As students, we have a very niche perspective. We try to give that insight to portfolio companies, whether it’s a product or service. We (want to invest in startups) where we can be consultative. We don’t want to invest in a company that is totally out of our realm or that we aren’t super passionate about as students. So, I think that perspective as students is very unique for our fund.
Kieran: What do you see as the biggest opportunities to improve RedHawk Ventures in terms of how you support founders?
Katherine: We must continue improving and furthering our relationships with the founders. A lot of times, we’ll invest, and (we don’t progress that relationship). We (lose) touch with founders, and though we will see what they’re doing and a lot of them being very successful, I think it’s important for us to continue improving our relationships and that consultative aspect with the founders.
Kieran: What advice would you give to student founders applying for investment from RedHawk Ventures?
Katherine: I think knowing that we’re specifically for students founders – we’re students helping students. It’s important to know that we’re students, so we’re not looking at companies all year round. So, you have to keep that aspect in mind. We’ll be able to work with you during the academic semester, so it may not always be within your timeline. Another important aspect is that we’re actively fundraising. We have enough left in our fund for one more investment, so know we’re trying to use that money wisely.
– now, let’s transition to questions to help students who want to join the RedHawk Ventures internal team –
Kieran: Can you give an overview of the application process for internal team members?
Katherine: Here at Miami, specifically at the beginning of each one of the semesters, it’s very heavy with recruitment. Fall specifically, we always get a bigger application pool. This last semester, we had 80-plus applications. We did have to do resume cuts because the bandwidth of our fund couldn’t handle 80 interviews. We have applications and then first-round interviews with behavioral questions. If you make it to the second round, we do a case study. We’ll give students a company, whether it’s in our portfolio or a company that we’ve looked at in the past, and see their thought process and what they look at when evaluating that startup to invest. So, it’s throwing them into what they would do inside the fund. We wouldn’t say there’s a right or wrong answer; we want to see their thought process. So, we emphasize applying in the Fall. This upcoming Spring will be on more of an invite-only basis to students that we thought needed one more semester of improvement. We can’t handle having too many people this semester.
Kieran: What are you indexing on when selecting students to join the internal team?
Katherine: I think it’s very much having a passion, not just an interest. Having 20 active members, we’re very tight-knit. We all want to be here. So, being able to express your passion, whether it’s for venture capital, entrepreneurship, investing, or what we do as a fund as a whole, like meeting with founders or our partnerships. I think it’s very important for students to express themselves during the application process. But, with many of the new members being first- and second-year students, they may not have much experience on their resume. Showing that passion can outweigh any of their experiences.
Kieran: You touched a little bit on the new member education semester. What do you cover during that semester, and how is it structured?
Katherine: Yeah, the new member education process is something we evolve each year. It’s super important for our new members, with many not knowing what VC is before joining the fund or applying. So, our new member education process is a 5-week course that all new members go through during their first semester in the fund. It’s in addition to our weekly meetings. So, new members will meet once a week with our Director of Recruitment and Talent to discuss a new topic related to venture capital or entrepreneurship. So, the first week is what VC is. Followed by what RedHawk Ventures is. How do we assess startups? How to structure a deal. Then, ultimately, a case study with their new member projects. They’ll pick a startup. We have a spectrum of how large the company can be. Usually, it’s seed stage since that’s what we’re investing in as a firm, but they’ll present to the fund, and we get to ask questions. So, they are applying everything they learned in the five weeks to their own project. It’s interesting and how we can create so many great internal members.
Kieran: Is there anything I didn’t ask about that is important to know if you’re considering RedHawk Ventures as a student founder or someone who wants to join the internal team?
Katherine: I would say for the student founders, it’s important to know that we’re students just as much as they are. We’re looking to help them. RedHawk Ventures is a great place to start for many students, specifically at Miami, because that student-to-student relationship may not be as intimidating. For those who want to join RedHawk Ventures, we index on having that passion, not just an interest. It’s super important to express early on. Get to know members before you apply to the fund. It’s also an organization you won’t just add to your resume. We want you to join and be involved. You have to be willing to put in the work. I think another point I wanted to add is that -- being one of the only student venture funds in the country -- any students who are listening and interested in starting this at your university, we, as a fund, are more than happy to aid you or share any insights that we have to grow this on other campuses. It’s an experience that’s helped improve my skills and ultimately made me interested in pursuing venture capital as a profession.
