After six years and the contribution of about 80 students, the
University’s Wolverine Venture Fund completed its first
initial public offering for the stock market earlier this month
— boosting its capital to about $3.5 million and providing
real-world investment experience to business students.

The sale of IntraLase, which develops lasers for LASIK eye
surgery, is the most recent activity of the fund, which operates
out of the Ross School of Business and allows MBA students to gain
experience in the venture capital process.

Since the Fund was created in 1997, it has made 20 investments
in 11 different early-stage companies, said Timothy Faley, the
fund’s managing director. IntraLase, which began trading on
the NASDAQ stock exchange at $13 a share on Oct. 7, was not only
the Fund’s first investment in 1998, but also its first
initial public offering — a process in which a company is
sold to become publicly traded on the stock market.

But instead of the investment returns being distributed to the
University, the returns are reinvested in the Wolverine Venture
Fund.

The fund is run by 19 first- and second- year MBA students,
along with the help of faculty, staff and an advisory board with
venture capital experience.

“Other universities have venture funds, but we are the
only school to let the fund be fully run by students,” Faley
said.

The fund began with the involvement of six students, and nearly
80 have worked with the Fund in its short history.

“It is a student-led fund. Students are making all the
decisions. We do have advisors who are entrepreneurs and venture
capitalists,” said MBA student Tony Pandjiris, who is in his
second year of working with the fund. “While the students are
making the decisions, the advisors give the students their
perspectives on how to approach deals, and the students are able to
discuss their conclusions with the advisors.”

The Fund is always searching for new investments. The students
currently running the Fund are divided into four teams that
research investment opportunities. Every Monday, the four teams
meet as a group and discuss the Fund’s potential
investments.

“Mainly the fund is a chance for MBA students to
understand the entire venture capital process,” Pandjiris
said.

Every year, the fund tries to make an initial investment in a
company that is not in its portfolio and tries to make an
additional investment in a company already in the portfolio, Faley
said.

As the fund searches for new investment ideas, it tries to look
at companies that are built around technology being developed in
Ann Arbor and through University research.

“There is a ton of technology in our backyard in Ann Arbor
and at the University,” Pandjiris said. “We can be a
gatekeeper for that technology.”

Between 1998 and 2001, the Fund invested a total of $250,000 in
IntraLase — an investment that returned $1 million to the
Fund after it sold its stake at $13 a share in the IPO. After being
publicly traded for less than three weeks, IntraLase’s share
price has approached $19.

Of the other 10 companies the fund has invested in, two were
acquired by other companies for less than the amount the fund put
in, Faley said. Four of the companies folded and four companies
remain in the fund’s portfolio.

The Fund’s initial investments in companies are usually
between $50,000 and $100,000, which is a relatively small amount
compared to the sums other venture funds invest, Pandjiris
said.

“The real value the Wolverine Venture Fund brings is that
for entrepreneurs, we are sort of the first stop. Obviously,
capital isn’t the main thing we are bringing to the
table,” he said. “We have close relationships with
venture capitalists in Ann Arbor and on the East Coast.

“We can work with entrepreneurs and help them with their
business plans and prepare them to meet with other venture
capitalists,” he added.

Formed in 1997, IntraLase used to be based in Ann Arbor before
moving to Irvine, Calif. The company operates in the health care
sector, developing and marketing an ultra-fast laser used in the
first step of LASIK eye surgery. This technology was partly
developed through 20 years of research by the University on
ultra-fast lasers.

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