The University of Minnesota is on track to raise a $20 million venture capital fund this year that will make seed-stage investments in startups born from academic research.
The school initially planned a pair of funds, including a $50 million fund that would back startups across the country. University officials have since scrapped plans for the national fund, preferring to focus on businesses commercializing University of Minnesota inventions, Vice President for Research Brian Herman told me in a recent interview.
“I think we’re going to develop a fund and a process here at the university that could serve as a national model for how other universities might want to think about maximizing return on what is essentially a very risky investment in a startup company,” Herman said.
The school is lining up a committee of outside investors who will review deal opportunities coming out of the school and co-invest in promising companies. The university and committee members will recruit an experienced executive to lead funded startups, which will be expected to raise subsequent rounds of funding from sources outside the school.
The university spun off about 50 companies over the past four years, and roughly 80 percent of those are still in business, Herman said.
Herman is also excited about a course the school recently launched through a partnership between the Carlson School of Management and the College of Science and Engineering. The class gives students an opportunity to launch their own startup. The university provides students with seed capital and pairs them with a mentor from outside the school.
“This is a way to give people real-world exposure and make them more successful in what they do after they leave the university — and generate new companies and jobs for the state of Minnesota.”