Board of Regents Approves $250 Million Venture Fund

Board of Regents Approves $250 Million Venture Fund
Janet Main Picture
UC President Janet Napolitano. UCSD Guardian file photo.

The UC Board of Regents approved the creation of a $250 million venture capital fund called UC Ventures, which they will invest in start-up companies founded on campus research.

The fund will be governed by an advisory board of outside experts and spent on commercializing the UC campuses’ most potentially profitable discoveries.

UC President Napolitano sees the fund as a natural avenue for the research already happening on campuses.

“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 — required to develop innovations that can benefit California and the world,” Napolitano said in an online post last month.

In documents obtained by the Guardian, one of the new programs approved by Napolitano will allow UC to accept a stake in companies founded by faculty in exchange for the use of university facilities and equipment.

UC Office of the President Assistant Director of Media Relations Dianne Klein says that the fund is still in its early planning stages.

“We hope those investments will pay off – both for the principals and for the investors – but there is no guarantee,” Klein said. “But, keep in mind, that these are long-term investments; they are not envisioned as quick profit-taking exercises and will not be designed that way.”

Following the announcement of UC Ventures, a press release from UCOP confirmed that the fund will not use tuition or state funding.

Klein also mentioned that, should the fund provide a good return on investment, it would not be enough to mitigate a potential tuition increase.

“Any one-time pay-out (such as might, theoretically, come from cashing out of an investment) does not provide the permanent, ongoing source of revenue that tuition does,” Klein said. “Those monies are used to fund faculty, teaching assistants and staff needed to perform our core educational mission.”

Klein stated that the cash infusions from UC Ventures may help the system pay for maintenance and equipment needs, as well as other costs like faculty recruitment and graduate student support.

While the venture fund itself is new, the UC system has launched hundreds of start-ups over the years, some of which were founded by UC staff and faculty. Others built on research that began on campuses, such as Seragon Pharmaceuticals, a San Diego-based company that was sold to Gentech this year for upwards of $1 billion.

A majority of the UC system’s past investments were also in the medical field, according to statistics compiled by the San Diego Union-Tribune. In fiscal year 2013, two-thirds of UC’s start-up companies were in medical therapeutics, devices and other similar arenas.

Almost a quarter of UCSD’s undergraduate population majors in biology and could stand to benefit from an investment from the venture fund.

Requests to both UCOP and the office of the Regents’ Chief Investment Officer for information on how many past start-ups were led specifically by UC students and graduates went unanswered. At Seragon, one member of the Board of Directors is an alumnus of UC Berkeley, and served as a postdoctoral fellow at UC San Francisco.

UC Ventures is set to launch by the end of 2015.

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