Some $1.9 million was awarded to 11 teams competing at the University of Chicago's New Venture Challenge this year — representing the largest investment pool in the 28-year history of the university's signature venture competition for MBA students.
Steven Kaplan, professor of entrepreneurship and finance at UChicago and faculty director at the Polsky Center for Entrepreneurship and Innovation, said that although fundraising remains down for startups in 2024, the record amount awarded at the event is a sign that venture capitalists are still out looking for sound investments.
Since launching in 1996, the New Venture Challenge — officially called the Edward L. Kaplan, '71, New Venture Challenge — has graduated more than 370 startup companies that have raised more than $1.2 billion in funding and have secured more than $8.5 billion in mergers and exits, launching such companies as Gruhub, Simple Mills and Braintree (which later acquired Venmo and was itself acquired by PayPal).
"People got carried away in 2021. They overinvested and then they pulled back and I think at this point, the VCs, most of them have money, they have dry powder, and they are looking for interesting things to invest in," Kapaln told Chicago Inno. "Last year, the market went down and we were at $1.4 million in total commitments. This year, even though the market is still a little down, we popped up to $1.9 million."
Half of the investment awarded during the competition comes from the school through donations. Should the investments hit, they'll see a return, and then some. The other half came from the 28 judges comprising local and global specialists, entrepreneurs and investors.
FreshX, a supply chain software startup, won first place at the competition, receiving $1 million in overall investment.
The startup, which is developing software to help food companies and freight brokers book and manage cold chain transportation and storage, was founded in 2023 and previously participated in TechStars Chicago.
Kaplan said the thing that stood out to the judges about FreshX was that it had data to back up its claims.
"The thing I tell the students is the best thing you can do in raising money is to tell people you have customers," he said. "It's showing traction. It's showing product-market fit and FreshX has some real traction."
Other winners included Encore Marketplace Inc., a resale marketplace platform, and Herriot, an AI tool for veterinarians.
This story has been updated to clarify that past participants in the New Venture Challenge include Braintree, which later acquired Venmo.
