[Updated, 1:05pm] Big universities are trying to figure out this venture capital thing. Should they form partnerships with specific venture firms? Should they start their own funds and incubators? How best to do that?

The latest exhibit is the venture firm Xfund (originally called Experiment Fund), which is affiliated with Harvard University and says it has raised $100 million for its second fund. When the Xfund first opened for business in early 2012, it was backed by New Enterprise Associates and housed at Harvard’s School for Engineering and Applied Sciences in Cambridge, MA.

The goal was to invest seed money into teams mostly led by recent grads—not just from Harvard, but from other schools as well. So far the Xfund has invested in more than a half-dozen science- and technology-based companies, including Kensho, Ravel, Philo, and Rest Devices. Its first fund’s size was undisclosed, but was probably a few million dollars. [This paragraph was updated because Xfund says it does not back current students—Eds.]

Since the fund’s initial announcement in 2012, at least three other venture firms have joined the partnership—Breyer Capital, Accel Partners, and Polaris Partners. The money for the new fund comes from NEA, Breyer, Accel, and undisclosed non-VC investors, who I’m told actually provided the bulk of the fund. [This paragraph was updated with new info from Xfund—Eds.]

Xfund is led by general partners Patrick Chung—who recently left NEA to go full-time on the Harvard-based fund—and entrepreneur and co-founder Hugo Van Vuuren. Chung is based in Silicon Valley (where Xfund now has an office), while Van Vuuren is in the Boston area. Both are Harvard grads.

The new fund is a big step up for the firm. With a lot more money behind it, the Xfund will probably evolve from a small seed-stage fund investing here and there to a more focused (and maybe more traditional) early-stage venture fund. The move parallels recent Boston-area fundraises by Romulus Capital and CommonAngels Ventures.

It’s unclear whether Xfund’s relationship to Harvard has changed in any way. For now, it appears the university is providing office space (at 33 Oxford Street in Cambridge), proximity to its people and facilities, and nothing more.

The Xfund stresses that it is legally and financially independent of Harvard, and that the university has no role in the firm’s investment decisions. But Xfund’s advisors include a number of Harvard faculty and staff, including dean of engineering and applied sciences Cherry Murray; professors Harry Lewis, Doug Melton, and David Edwards; Innovation Lab head Gordon Jones; student agencies president Ryley Reynolds; and chief digital officer Perry Hewitt.

Universities have long invested in venture funds through their endowments, but academic politics make it tough for them to run their own funds or invest in their students’ or faculties’ companies. Nevertheless, Stanford University has made progress with its recent venture fund and StartX accelerator. The University of California is starting up a $250 million fund, called UC Ventures, to invest in its campuses’ spinouts. The University of Michigan has had student-led venture funds for some time. And at MIT, the E14 Fund is investing seed money in MIT Media Lab startups; the Institute has other startup incubator programs, too.

A common thread in all of the above is that the ethics of universities and venture funds have to be spelled out clearly. In most cases, like the Xfund, the entities remain independent—but their networks and personal relationships are intertwined.

The bigger picture? Research universities and venture firms are colliding more in their efforts to tap into the startup industry and student talent. In the meantime, that means more funding available for entrepreneurs.

via Xfund Closes $100M Fund as Venture Firms and Universities Get Cozier | Xconomy.