Zell Lurie Commercialization Fund, 2019 Report

2019 Activities Report

ZELL LURIE COMMERCIALIZATION FUND

“The Zell Lurie Commercialization Fund has given me a new perspective on what drives an earlystage company’s success.

Given my aspirations as an entrepreneur, it has been extremely insightful to have a seat on the ‘other side of the table’ and apply those learnings into my own business!”

— Dale Jarosz, MBA ‘19, Co-founder, Bschool Travel

T

he Zell Lurie Commercialization Fund is more than an Entrepreneurial Studies class (ES702) at the University of Michigan Ross School of Business. It’s a highly valuable and unique opportunity for students to learn all the ins and outs of startup investing through real-life experience. It’s also an incredible way for regional startup founders to create value through muchneeded seed funding.

The Zell Lurie Commercialization Fund, known as ZLCF, is a graduate student-run, early-stage investment fund that invests in great founders with defensible technologies in compelling markets. The fund — which focuses on opportunities based on innovations in the U-M community and surrounding areas ­— backs entrepreneurs with big ideas that can have a significant impact in the world and lead to target returns for the fund.

ZLCF Fellows are an amazing, multidisciplinary group of graduate students (primarily MBA students along with PhD and MD students) who spend two years on ZLCF and take a hands-on approach to investing that leverages the experience, network, and knowledge of the team and the resources available at U-M. Thanks to generous support from John and Nancy Kennedy — and others who contribute to the Zell Lurie Commercialization Fund — Michigan Ross is able to continue offering this unparalleled learning opportunity through the Zell Lurie Institute. In doing so, students from across campus gain exceptional experience evaluating new technologies, meeting with inventors and company founders, developing venture hypotheses, performing due diligence on investment opportunities, working with entrepreneurs on value creation plans, and making decisions on investments.

Please read on as the ZLCF Fellows tell you about their ZLCF accomplishments and experiences.

Our Key Milestones & Accomplishments in 2018-2019 • We evaluated more than 75 companies, hosted 18 entrepreneur pitches, and completed 11 due diligences. Through our rigorous process, we ultimately decided not to make new investments this year.

• We established an amazing new class of fellows. This year we received a record number of applications and a huge amount of student interest.

The result was a cross-functional, intellectually diverse class of 22 new fellows spanning business, engineering, and scientific degree programs. The fund is in good hands going forward!

• We improved the fund structure. The fund is growing, and we ultimately decided that the sector-based individual team silo structure could be improved. Our new simpler structure offers the right support while facilitating increased flexibility in deal sourcing and a more cohesive experience for fellows.

• We had a portfolio company go public! We were thrilled to have an exit in the fund portfolio this year as portfolio company nLight completed its IPO. The then Frankel Commercialization Fund Fellows invested in Arbor Photonics, a high-power laser solution startup out of U-M, which was later acquired by nLight.

A MESSAGE FROM FUND CO-MANAGERS Nicole Litvak is a second-year MBA with interests in renewable energy/cleantech and entrepreneurship. She holds a Bachelor’s degree in Economics and Psychology from Brandeis University. Prior to Ross, Nicole spent five years as a solar analyst at the market research and advisory firm GTM Research. She interned with the Energy Partnerships team at Google Hardware in the summer of 2018 and will be returning to Google after graduation.

Joe Cabral is a scientist-turned-MBA passionate about using business as a vehicle to translate scientific innovation to improved human health. Prior to business school, he completed a BS and MS in Biology and Genomics, respectively, at the University of Connecticut, followed by four years as a research scientist at Moderna Therapeutics. He will soon be joining the Cambridge, MA-based life science venture capital and innovation firm, Flagship Pioneering, as an Associate.

W

e are a dynamic team of 35 graduate students who span business, science, and medicine. To effectively deliver on our mission, we are constantly forming and reforming teams to evaluate new opportunities and conduct due diligence. This process has provided two critical and distinct opportunities.

First, by working with other students from a diverse range of backgrounds, we have learned how we most effectively work with others, as well as how to further the types of team environments in which we thrive.

Second, as managers of the fund this year, we had the unique opportunity to engineer teams to maximize success in pursuit of our mission, allowing each of us to gather key insights about our respective leadership styles while instilling critical management skills for the future. Not to be lost on the people side of things, in our two years at ZLCF, we have had the chance to establish relationships with an amazing network of current students, alumni, advisors, and local entrepreneurs that will continue to create value in our respective careers moving forward.

Regarding techniques for opportunity evaluation and forecasting of investment returns, ZLCF imparted a systematic method for the qualitative and quantitative analysis of early-stage investment opportunities. This method was reinforced at various stages of company evaluation and supplemented with industry-specific applications synthesized by other students or brought in from external sources.

Through our time at ZLCF, we have seen dozens of company pitches and have led several due-diligence efforts, providing ample opportunity to apply this method, cement the thought process and analytical techniques, and ultimately make informed investment decisions. In addition, ZLCF has served as an excellent “feeding ground” for exercising curiosity and learning about new market opportunities more generally.

ZLCF has deepened our understanding of emerging technology trends such as artificial intelligence, virtual reality, high-performance computing, and blockchain (just to name a few), which will be invaluable to our post-Ross careers in high tech and healthcare venture creation, respectively.

ZLCF is an embodiment of the action-based learning approach that differentiates Ross and the University of Michigan. What’s more, ZLCF created a similarly outsized impact on each of our academic journeys, and for that we are extremely grateful!

“ZLCF has been invaluable to me for several reasons. Since the majority of my time is spent doing technical work, it was insightful to realize that technological breakthroughs on their own very rarely survive in the marketplace.

Moreover, it helped me become a more critical thinker; the quicker a make-or-break question relating to a company could be ideated and answered, the better for all parties involved. As someone who eventually hopes to spin out my own technology, it was invaluable to get in the thought process of the investors on the other side of the table. If I know what questions I would ask as a VC before I ever make it to the pitch that is a huge advantage.” ­— Brian Iezzi, PhD, Returning Fellow from Materials Science & Engineering

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