Call Sandyha Rao, a second-year Yale MBA student, a venture capitalist in
training.

Rao, 26, joined Sachem Ventures, Yale's School of Management student-run
venture capital firm, in her first year as a student and was hooked on the
excitement and challenge of the VC world.

Sachem Ventures has offered Rao a unique opportunity to learn about venture
capital first hand with the safety net of mentors.

"This is a great opportunity for me," Rao said. "Before I became involved, I
wasn't quite sure how the VC world worked. Our advisor worked in the
investment world and several VCs are investors in Sachem Ventures. We learn
so much about venture capital, screening proposals and due diligence."

Sachem Ventures is the only independent, student-run venture capital firm in
the country that began about three years ago when a couple of Yale MBA
students posed the idea to David Cromwell, Lester Crown Adjunct Professor of
Entrepreneurship. He liked the idea and helped lobbied for Yale's approval
and began to raise the capital to fund Sachem.

Today, Sachem has $1.5 million in capital and has drawn funding from Yale
University, New Haven Savings Bank, Zilkha Capital (New York) and several
venture capitalists and angel investors in the New Haven area.

So far, the student-run VC firm has considered 80 business plans and
completed one deal. Sachem invested $100,000 in Higher 1, a student financial
services company, and is doing due diligence on eight other proposals. The
final decision to fund a start-up company actually falls to the Sachem
Ventures board consisting of the investor representatives, a VC and Cromwell.
The most difficult hurdle to get Sachem funded was convincing investors that
students and a professor could make sound investments.

"We were looking for funding during the height of the dot.com craze and their
collapse," Cromwell said. "We had to get the necessary approvals. We had
never done anything like this before. We had to overcome investors' fears
that students and a professor would give away money. That's why we allow
investors to make the final decision."

Cromwell, former director of the J.P. Morgan Capital, the firm's venture
capital arm, believes Sachem gives students incredible exposure to the
challenges of running a VC firm beyond academic theory. Cromwell describes
venture capital as an apprenticeship business.

"VCs learn about venture capital, they're certainly not born," Cromwell said.
"It's an apprentice business. Sachem gives our students hands on experience.
They have a leg up in the business, if they can get a job. VCs tend to use
networking [to add staff]."

Sachem plays for real - this is no mere academic exercise. Cromwell said
Sachem has three goals:
·   Make money for investors
·   Help promote the local economy
·   Serve the New Haven community

Cromwell thinks Sachem Venture has already paid dividends. Yale MBA students
won the National Venture Capital Investment Contest in its first appearance
in 2001, defeating 32 other graduate business school teams. A team of five
students read six actual business plans and interviewed six entrepreneurs.
Next, the team did due diligence and selected a business to invest in, then
presented their choice before a panel of VCs.

"We're quite proud that we won this national competition in our first
appearance," Cromwell said. "I think Sachem is paying off. It allows students
to understand that the people [entrepreneurs] are real. You can't replicate
that in a textbook."

Now that Sachem is running at full strength, the student VC firm is looking
to increase its deal flow. Rao said Sachem is open to a broad range of
business proposals. Sachem expects to make three to four additional deals
within the next year in the range of $75,000-$125,000.

Sachem has a student investment committee that reviews business plans. In
fact, Rao thinks Sachem does more due diligence than many VC firms because it
has a large staff of 60 student volunteers. Cromwell insists on being
thorough in due diligence.

"We probably perform more due diligence than large VC firms because we have
quite a few hands helping out," Rao said. "We learn a lot from the research
then meet as a committee to recommend or reject a business plan."

In addition, Sachem can offer marketing strategies, planning for second round
funding, resources to start ups as well as recommendations of possible CEOs
for companies.

In evaluating proposals, the Sachem due diligence committee has found that a
bulletproof business plan is critical when entrepreneurs are looking for
capital. However, the experience and integrity of the management team are
also important in reaching a final funding decision. If Sachem makes its
investors money, Cromwell expects to raise additional capital to expand the
VC firm's investment portfolio.

Rao thinks her experience with Sachem Ventures is invaluable. It has offered
her experience beyond the classroom - a peek into the excitement and
challenges the VC world.

"The work demands a significant time and commitment," Rao said. "I'm unsure
if the VC world is where I'll work eventually. But it's been an exciting
experience to be involved in.

To contact Sachem Ventures, e-mail Rao at sandhya.rao@yale.edu.