The partners at AACE are not your typical middle-aged white men, but students from all disciplines studying at the University of Missouri. To get involved, they have to apply to take the AACE course in the business school. Fifteen to twenty students are admitted per semester, and they can take the course multiple times.
Interested startups from Missouri are completely at the mercy of the students – 67% have to agree to fund a company for the deal to go through. Each investment can be up to $100,000, with the fund itself totalling over $500,000. If the students choose wisely, the money they make from successful portfolio companies goes back into the fund.
At the beginning of each semester, assistant professor and facilitator William Allen gives some lectures and assigns some reading. But even he doesn’t have a say in the investments.
“Given the liberty to control their own destiny, the students are much brighter and creative than I could hope to be. I may open a few doors, but it is their job to walk through,” he explains.
So far, AACE participated in two investments along with the angel group Centennial Investors – funding EternoGen and Elemental Enzymes. Funding for AACE came from the Kauffman Foundation and alumni donations. According to KansasCity.com, schools like the University of Michigan and Washington University have similar programs.
As for the experience, it was a unique one. Knoda was selected as one of three SparkLabKC accelerator companies to present to some of the AACE students. After a short pitch, the students asked questions that immediately impressed them.
“They gave us a pretty good grilling,” recalls James Flexman. His cofounder Kyle Rogers adds, “Honestly, harder than a lot of the other investment conversations that we had. They asked some pretty pointed questions.”
The students were intrigued, and Rogers and Flexman could understand why. Knoda is an app for making predictions and sharing them with your friends, and college students are squarely in their target demographic. You can predict who’s going to win the weekend football game or the Oscars, or what Kim and Kanye’s kid will be named. Then, you can share those predictions with your friends and see who comes out on top.
AACE invited Knoda to the university to give a longer pitch, and they spent over an hour doing a demo, explaining their business model, and talking strategy. After a few more phone calls and emails, AACE gave the okay for due diligence to start in November. Things slowed down as everyone dispersed for winter break, but the deal was finally approved earlier this year. With that, Knoda became AACE’s first solo investment.