At most universities, students learn finance through case studies and spreadsheets. At the University of Michigan’s Ross School of Business, some learn by deciding where to invest real money.
This model, student-run venture capital funds, is gaining traction across higher education as universities look for ways to deepen experiential learning, strengthen startup ecosystems, and better prepare students for careers in entrepreneurship and finance.
At Ross, the approach has been developing for decades. What began in the mid-1990s as the Wolverine Venture Fund, initially a student club, has grown into a broader ecosystem of student-managed investments spanning venture capital, commercialization, social impact, and early-stage investing.
“Ultimately, these things are such high risk anyway that nobody really knows,” said Stewart Thornhill, Eugene Applebaum Professor of Entrepreneurial Studies at Michigan Ross, and former executive director of the Zell Lurie Institute for Entrepreneurial Studies. “So let’s empower them to make that decision.”
That idea of giving students real responsibility rather than simulated practice is at the heart of why these programs matter.
From Student Club to Institutional Model
According to Thornhill, the initiative began when a donor offered $2 million to create a student investment fund. University leaders were hesitant to hand real capital to students, but the donor insisted that they control the investment decisions. The university ultimately accepted the gift and carved out a small, high-risk slice of the endowment for that purpose.
Over time, the investment club evolved into a formal part of the curriculum. MBA first-year students learn the mechanics of early-stage investing, then return in their second year to take on leadership roles, lead diligence teams, and manage parts of the portfolio.
That apprenticeship model became the foundation for additional funds. Ross now offers multiple student investment courses, including the Zell Founders Fund, which Thornhill launched to support recent graduates building companies after leaving campus.
The need for that fund was practical. Thornhill said the university was effective at helping students incubate ventures while they were enrolled, but many founders lost momentum after graduation when they needed income and no longer had university support.
Living with Ambiguity
What distinguishes student-run venture funds from traditional business courses is not just that the money is real. It’s that the uncertainty is also real.
In a classroom case study, students are usually handed a well-defined problem, a tidy packet of information and, often, the benefit of hindsight. Venture investing offers none of that safety net.
“Often there is no data,” Thornhill said. “It’s a new product or a new sector and you’re trying to figure out the market size for a product that has never come to market yet.”
Students must gather information from scattered sources, decide what is credible, identify gaps, and make judgments despite incomplete evidence. They review financials and forecasts, analyze market size, assess competition, and meet directly with founders, often while working through disagreements within their own teams.
The messiness is part of the lesson. Students are not just learning how venture capital works, but also how to think under pressure, communicate, manage unknowns, and make decisions when the answer is not obvious.
Students Hold the Power
With the course-based funds, student teams conduct due diligence, present their findings to the larger group, and vote on whether to invest. Faculty oversight remains, but the students drive the process.
That structure is intentional. If students are going to learn how investors think, they need to shoulder the responsibility and deal with the consequences that come with real-world investment decisions.
A Different Relationship with Risk
One of the biggest shifts students must make is learning to think differently about risk.
Many MBA students come into venture investing steeped in traditional finance, where reducing risk is often the goal. Early-stage investing works differently. In that world, uncertainty is unavoidable, and many investments fail.
“You can’t operate in early-stage investing unless you have a willingness to take on risk,” Thornhill said. “Many of the deals will go to zero.”
He said one of the instructor’s biggest jobs is helping students recalibrate. They often want more data, more proof, and more market development before moving forward. But waiting too long can mean missing the opportunity altogether.
Thornhill compares it to catching a falling knife: grab too early and you get cut, grab too late and it is gone. The challenge is identifying the moment when the opportunity is risky, but still viable.
That mindset has value beyond venture capital. Students learn how to categorize risk, assess it, mitigate it, and act without perfect information, skills that matter in entrepreneurship, leadership, and innovation work.
Bringing Value to Future Careers
For students interested in a career in venture capital, investment banking, or early-stage finance, the benefits are obvious. They leave with experience in due diligence, market analysis, forecasting, and investment decision-making.
Students who have spent time on the investor side gain an advantage when they later sit across the table requesting capital.
Institutional Benefits and Real Limits
Beyond learning, student-run funds can strengthen a university’s broader innovation ecosystem. Ross tends to focus on local entrepreneurs or startups within driving distance, in part so students can visit facilities, observe operations, and assess a company’s culture in person.
That local focus helps connect them to the regional startup economy while giving universities a visible role in supporting innovation beyond campus.
The direct economic effect may be limited, Thornhill said, but the long-term institutional benefits can be meaningful. Even when investments fail, universities may build goodwill with founders who remember the university took a chance on them.
There is also a structural question. Donor gifts support the efforts without any expectation of returns. Thornhill said that matters. If outside investors require returns, student learning can quickly become secondary to portfolio performance, and external pressure can influence decision-making.
“If you allow a structure whereby there is an expectation of returns back to external investors, then the learning doesn’t become the primary focus,” he said.
A Stronger Case for Learning
As universities face growing pressure to show career relevance, support innovation, and offer more than classroom theory, student-run venture funds present a compelling model.
They teach how to evaluate uncertainty, work through ambiguity, and make decisions with real consequences. For higher education leaders, this may be the most important takeaway.
They also place universities closer to the startup economy, not just as observers, but as participants.
In a moment when institutions are under pressure to produce graduates who can lead in fast-changing industries, that kind of experience is hard to dismiss.
