Venturing into the Alzheimer's market
BR Ventures' investment in Medical Care Corp. pays off for both partners
By Irene Kim
In March 2003, Dennis Fortier, MBA '90, president and CEO of Medical Care Corporation [www.mccare.com], was seeking venture capital for his fledgling company, a developer of highly accurate tools for early detection of memory loss – a red flag for Alzheimer's Disease. Having heard from other Cornell alumni about BR Ventures (BRV), the Johnson School's new student-run venture capital fund, he sought out BRV fund advisor David BenDaniel, professor of entrepreneurship. Sixteen months later, the company became the third investment in BRV's high-tech portfolio.
– Professor David BenDaniel
Since then, both partners have enjoyed a fruitful relationship. The company, a Johnson School investment in every sense, benefits not only from BRV funding but from students' assistance, as well as faculty and alumni expertise. The BRV student managers gain hands-on venture capital experience. And one former BRV manager, Rouzan Agadjanian, MBA '05, has become Medical Care Corp.'s full-time marketing director.
A practicum without parallel
While several other universities have venture capital funds, BRV is the only student-run venture capital fund in the United States; only the Johnson School offers its student fund managers complete autonomy, as well as full responsibility for managing the fund.
"Many other schools' VC funds are professionally managed, and use students as gofers; here, students make deals and decisions," says BenDaniel. "Anybody in the VC business can tell you that you don't learn by being a gofer. You learn by getting your hands dirty."
BRV provides fund managers a priceless experience and an edge over other job candidates. "When interviewing for venture capital funds, I could speak abstractly about what I could do, like other MBAs, as well as specifically about what I had done with BRV," says Vasilios Roussos, MBA '04.
Faculty are careful not to interfere with the students' decision making, notes Zachary Shulman, senior lecturer of entrepreneurship as well as a BRV fund advisor. So when BenDaniel told the BRV fund managers about Medical Care Corp., he was entirely impartial.
Roussos and fellow fund manager Justin Smithline, MBA '04, carefully investigated the company as a potential investment. "The product was really solid, there was a huge need in the market, the market was projected to grow rapidly, and we received good feedback from the company's customers," says Roussos.
The timing was good, too: "We saw that a little capital at this point could be constructive for the company; for us, it would be money well spent." In July 2004, BRV made its $42,000 investment. In addition to shares in the company, BRV received an observer seat on Medical Care Corp.'s board and a ten-week student internship at the company's corporate headquarters in Irvine, Calif.
Benefits all around
Fortier was impressed by the students' thoroughness during BRV's many months of investigation into the potential investment. "The due diligence process demonstrated to me that we would not just gain an investment, but that these were really bright, eager, energetic people who could do analysis, find resources, back ideas, and do projects."
BRV, in turn, appreciated the company's willingness to provide a board seat and internship. "The use of students and BRV resources to develop the company boded well for what BRV could do for the company," says Roussos.
Agadjanian, who had done extensive volunteer work for BRV during the 2003-04 academic year (as a first-year student, she couldn't be a fund manager), was selected as Medical Care Corp.'s student intern. In the fall, she became the BRV fund manager for the company, calling in to listen to board meetings. "When I was graduating, Dennis came to speak in Professor BenDaniel's class," says Agadjanian. "I asked if he would hire me, and the rest is history."
Each subsequent generation of BRV managers assigned to Medical Care Corp. interacts with the company by regularly calling in to offer help, says Fortier. That person also reports back to BRV's investors on the company's progress.