University of California Announces Approval of UC Ventures
The University of California (UC) has announced the approval by its regents of a venture capital fund of $250 million. Not a great deal by today’s standards, but enough to fund startups initiated from university-financed research.
The proposed scheme will fund commercial opportunities that arise from research carried out in university premises. These include 10 campuses, 5 medical centers and 3 national labs. The fund will be run by an advisory board including investment experts from Silicon Valley. Known as UC Ventures, the fund will be launched in 2015.
UC Funded Research
The University of California seems to want to take advantage of venture capital investment in enterprises that have been funded by its own research. It has seen many initiatives that were build on research within the university to have received external startup funding, and subsequently exited with a good profit though it has not specifically stated this as a reason for the development.
In fact, by the end of 2013, the university system has been responsible for the launch of 755 startups, of which 195 continue to have viable products on the market. Among these have been Aragon Pharmaceuticals, which was purchased in August 2013 by Johnson & Johnson, and also Seragon Pharmaceuticals, which was acquired by Genentech in July 2014. Another was Kite Pharma, whose first public offering was made in June 2014.
Objective of UC Ventures
The objective is to “generate attractive, risk-adjusted returns” from venture capital that does not involve tuition or any funding from the state. This is not an unsurprising development from UC, because, like many universities with a good technological record, it has seen a number of profitable developments coming from research carried out in its laboratories which contain specialist research equipment.
It has been a target for worldwide venture capitalists because of the large number of students, existing alumni, faculty and entrepreneurs who are all open to receiving private funding for their work. Managers of UC Ventures along with designated experts will evaluate the developments that come from the campuses for ideas worth funding.
According to UC President, Janet Napolitano on Monday, Sept 15: “In addition to any financial benefits, we see this fund as a potential vehicle for providing resources to support the basic research and talent among both faculty and students that is required to develop innovations that can benefit California and the world.”
An Advisory Board is to be set up comprising leading Silicon Valley experts and others from around the state, the members to be announced later. Their function will be to offer industry insight and advice to the fund. UC Ventures will be run by a team from the office of the chief investment officer plus the university’s resident experts.
There appear to be no reasons why universities should offer venture capital to startups originating from research carried out in the university. Perhaps this will be the beginnings of a new source of income for places of learning, although UC states that any profits are to be ploughed back into more startup capital.