When it comes to making investments and providing capital for start-ups to flourish, these activities are usually performed by seasoned venture capitalists, not students. But the opposite is true for Protégé Ventures, which was initiated by the Singapore Management University’s Institute of Innovation & Entrepreneurship (SMU IIE) in collaboration with Kairos Asean, a community of entrepreneurs.

Since its inception in 2017, the student-led venture capital (VC) firm has made several early-stage investments. These include mental health tech company Intellect, recruitment tech company TalentTribe; education tech company Joni.AI; food waste management company Lumitics; social network company Rooit; and artificial intelligence platform provider Nurture.AI.

While the aim is, of course, to make money from these investments, Protégé Ventures has been a breeding ground for new recruits to be fed into the growing VC and start-up ecosystem. According to Jerald Low, managing partner of Protégé Ventures, 70% of its members who have graduated have joined VC firms such as Qualgro and Indonesia-based MDI Ventures. Among the 70%, some have also joined start-ups, such as Grab, Shopee and ShopBack, he adds.

“So, I think that the core knowledge that we teach is actually very transferable. It helps them whether they are in the VC space or start-up space. This knowledge is able to help them to grow further as an individual because of the critical thinking skills as well as the investment thought processes that we do very vigorously at Protégé Ventures,” he tells The Edge Singapore in an interview.

In fact, Low, who is a final year banking and finance student at the Nanyang Technological University (NTU), has just completed his internship at Wavemaker Partners, a VC firm headquartered in Singapore and Los Angeles. Wavemaker is one of the funding partners of Protégé Ventures. It would not be a surprise if Low secures a job at Wavemaker after he graduates.

He notes that other members of Protégé Ventures, too, have interned at other VC firms, such as Antler and C31 Ventures, the VC arm of property developer CapitaLand. What about Protégé Ventures’ other partners? Do they also offer jobs and internships to members of Protégé Ventures? After all, the student-led VC firm’s other funding partner is Jeffrey Chi. He is managing director of Vickers Ventures Partnerships and vice-chairman (Asia investments) at Vickers Capital Group.

Protégé Ventures also has several advisors, who lead their respective VC firms. They include Victor Ng and John Kim, who are managing partners at TSR Partners and Amasia Fund, respectively. There is also Robert Chew and Paul Bradley, who are managing partner, and chairman and CEO, respectively, of iGlobe Partners and Caprica International.

Low says these partners and advisors are not obliged to offer roles at their respective VC firms. It is more of a loose arrangement — that is if they see potential in a member of Protégé Ventures, they may make an offer, he says. But he adds that Protégé Ventures is looking to formalise an agreement with some of them in the hopes of facilitating recruitment into some of these VC firms.

For students, by students

Protégé Ventures was founded by several individuals from Kairos Asean in partnership with SMU IIE. It was established because the founding partners realised that the local universities lacked systematic training programmes on venture capital, according to Low. This is despite the mushrooming of start-ups in Singapore over the last decade.

Therefore, they decided to start a student-led VC firm to fill that gap. “We want to complement conventional education through this hands-on and rigorous experience of being a venture capitalist,” he says.

Low says he stumbled upon Protégé Ventures by accident. Prior to NTU, he was oblivious to the world of venture capital. But after taking part in a business competition at university, he got in touch with one of the judges, who was one of the founding partners of Protégé Ventures. That sparked an interest in venture capital, leading him to join Protégé Ventures.

Low claims that Protégé Ventures is the first student-led VC firm in Singapore and Southeast Asia. It was modelled after other student-led VC firms that are more prevalent in the West. These include Dorm Room Fund in the US and Front Row Ventures in Canada, he notes.

What differentiates Protégé Ventures from a typical VC firm is its investment focus. Low says Protégé Ventures only invests in start-ups founded by students. These include those founded by students of SMU and other universities too. “So, we really focus on start-ups that come up through the universities,” he says.

Protégé Ventures considers three elements before ploughing money into these start-ups. For one, the start-up founders must be “outstanding”. Secondly, the start-ups must be borne out of the university’s commercially viable research. Finally, the start-ups must have a target segment involving young people.

Like most other VC firms, Protégé Ventures’ investment process starts off with deal sourcing. Low says Protégé Ventures screens about 300 start-ups on average a year. The decision to invest or not lies with the investment committee, which comprises completely by students.

But unlike many other VC firms, Protégé Ventures does not invest immediately via equity rounds. The student-led VC firm follows a similar path like 500 Startups by issuing convertible notes worth $25,000 to $50,000 a cheque to start-ups, says Low. The interest rates range from 4% to 6%. Upon maturity of the convertible notes, Protégé Ventures may choose to recoup its investments or convert them into equity at the next financing round, he adds.

Low says Protégé Ventures’ funding partners do not get involved in making investment decisions, but only provide the funding. The funding partners do not demand a return on the funds provided, he notes, as it is their way of “giving back to society”. Low declines to disclose how much funding Protégé Ventures receives.

Protégé Ventures’ advisors also do not get involved in making investment decisions, but only offer their insights in general, he adds. For instance, they would advise on how to look at deals in a “different light” and how it is clinched in the industry. They would also offer their views on how best for a start-up to expand regionally. These are conducted through master classes and fireside chats organised by Protégé Ventures.

No exits yet

Protégé Ventures has so far invested a total of $150,000 across six start-ups. Why are there not more investments in its portfolio?

Low says Protégé Ventures does not have a target number of start-ups to invest in a year. Rather, the student-led VC firm wants to be “prudent” in investing with the funding provided by its funding partners, he says. He points out that many start-ups do not make it past the “crucible of fire” — that is the interview session. “We only invest when we find that there is a good fit with Protégé Ventures as well as we are able to provide the same value to them,” he says.

Protégé Ventures has also yet to make any exits from its investments thus far. Low says all the start-ups are at the early stage of growth and have yet to achieve the growth levels required before Protégé Ventures considers an exit. “So, I wouldn’t dare to think of an exit strategy for them yet because they’re still finding their way,” he says.

In the meantime, Protégé Ventures will continue to provide support to its portfolio start-ups. Low says it could be as little as providing a space for them to host activities at SMU IIE or to help subsidise part of their rental. Network opportunities and relationship building are also other areas that Protégé Ventures can provide through its members’ personal connections.

Interestingly, amid the Covid-19 pandemic, instead of looking harder for the ideal internship with big companies that will hopefully lead to stable jobs with regular income, Low notes that there are more students getting into the start-up scene. These students want to try their hand at building their own businesses because their internships have been rescinded, owing to the “circuit breaker” measures, he says. “This is a perfect time to do it because what else can you do, right?” he says.

Low says these budding start-up founders have been seeking advice from Protégé Ventures. “I think most of the value add that we [provide] as a venture fund is not merely writing a cheque to them. Some of the things that we do is [to] provide a perspective of how these investments are structured; how to seek for funding; how to scale a company, or [other] insights that generally ordinary students might not have,” he says.