BoxGroup loves giving money to MBA founded ventures. Don’t believe it? Ask Adam Rothenberg, managing director for BoxGroup, a New York City-based early stage investment fund.
“We love investing in smart MBAs,” Rothenberg announces to Poets&Quants. “We think they are often analytical and really good at building a team and a strong foundation for a company. They are less product-driven and more execution-driven.”
Rothenberg would be an exceptional ally to have in your corner. He and fellow managing partner David Tisch, the grandson of famous entrepreneur Laurence Tisch, regularly identify and assess ventures at the seed stage, dishing out $50,000 to $250,000 chunks of investment.
“While you’re in an MBA program, it’s an amazing time to start a company,” believes Rothenberg, who has an undergraduate degree in finance from Wharton. “You have free time. You’re in a great environment with really smart other people that could potentially be co-founders or early teammates.”
Adam Rothenberg of BoxGroup
BOXGROUP AND SV ANGEL TOP INVESTORS LIST FOR SECOND YEAR IN A ROW
He and partner Tisch walk the talk. BoxGroup has invested in nine of this year’s Top 100 MBA Startups, almost as much as legendary investor Ron Conway’s SV Angel in San Francisco which has put cash into 10 of this year’s top MBA startups. Both firms each backed 13 MBA startups on our list last year. And the number balloons if you tote up the investments among BoxGroup, Tisch’s individual investments and TechStars, where Tisch and Rothenberg have both worked. All together, the duo can claim investments in 17 of the top startups. They’ve backed the likes of Harry’s, Oscar Insurance, PillPack and Rig Up, among others.
What does he look for in a new business idea? A compelling story, a vision and a developed market-tested product, where you have an elite MBA on your resume or not. “I think a lot of fundraising, especially in the early stages, is about storytelling,” he believes. “I think it’s a good founders job to weave together a narrative about who they are and where the company’s going.”
Woe to those who venture into his office with a concrete plan and vision. “There are no excuses,” insists Rothenberg. “If you come to us without anything and all you have is an idea, that’s not great. If you’ve used your time to network and find other great people and you’ve built a product and you’re in market and testing it, then that’s awesome. And that really holds true with anyone, not just an MBA.”
THE SURPRISINGLY SMALL WORLD OF VENTURE CAPITAL
The last five years have been a great time to raise money, and VCs have poured plenty of cash into the business plans of MBAs. But in the past six months, as valuations on early stage companies began to deflate, the hurdles are getting higher. Still, there’s a fairly stable field of angel investors and VCs who consistently gravitate to the MBA startup market.
Behind SV Angel and BoxGroup is Menlo Park, California-based VC firm, Sequoia Capital, which invested in seven top MBA startups. Sequoia Capital, founded in 1972, has a robust portfolio of companies they’ve invested in including such social media and tech heavy hitters as Google, Facebook, Instagram, DropBox, and AirBnB. They’ve also backed such top MBA startups as DoorDash, Nubank and Grofers, among others. Next up on our list of the most generous MBA funders is San Francisco-based 500 Startups. Founded by Dave McClure and Christine Tsai, 500 Startups backed GrabTaxi, Havenly and Hinge.
Legendary tech investor Ron Conway is the founder and co-managing partner of SV Angel in San Francisco
Despite how large and spread out the venture capital world seems, Rothenberg advises to not forget it’s actually a cul-de-sac of investing, a world in which pretty much everyone knows each other. “I think people forget how small the venture capital world is so a lot of us talk to each other and chat, whether it’s work specific or socially,” says Rothenberg, noting one common mistake made by founders is exaggerating a pitch or story. “It’s easy to get caught in a lie.”
SELLING A ‘VISION’ MORE THAN AN ‘ACCOMPLISHMENT’
Rothenberg also advises using the unique time in business school to form strong teams, which is also a plus when pitching BoxGroup on a venture. “Having a strong team shows us they can inspire others to join and understand how to hire people,” he says.
Other plusses for founders with outstretched hands: Rothenberg says it’s important to have an intriguing professional past that demonstrates you can handle leading your own company. A previous relationship with the fund doesn’t hurt, either. “They’re selling us more on a vision rather than anything they’ve accomplished,” explains Rothenberg. “The more they’ve done in their past and the better we know them, we’re able to draw a line on our graph of where we think it’s going.”
Finally, while being the “cool” thing to do, Rothenberg cautions that starting and running a successful business is a tough road. “Startups are pretty cool to start and people think it’s a path that they should go down, but it’s not easy,” he says. It’s incredibly hard to start a company. We make sure we’re talking to MBAs that can really execute.”
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