Entrepreneurs developing innovative startups have a secret weapon, and it is not a nuclear warhead. These covert weapons are student-run venture capital (VC) funds. Student-run venture funds are typically found at well-established private business schools like Cornell University's Center for Technology Enterprise and Commercialization (CCTEC), with their graduate fund, Big Red Ventures, one of the longest-run student-run venture funds in the United States.
But even well-established public universities are becoming prominent players in this field. Schools like ours, the University of Connecticut (UConn), with Hillside Ventures, is a prime example of these funds' impact on the entrepreneurial community. Funds like UConn's Hillside Ventures break away from the traditional Master of Business Administration (MBA) focused structure to a holistic school structure.
Student-run funds, seen as a club for elite business school students, are finding their way into the mainstream student body and bringing an entirely different value to each fund. Student-run funds already provide tremendous value to startups, and it is not the check size. The average check size seen in student-run funds are $25,000 to $100,000.
What sets these funds apart from most venture capital funds are more accessible access to capital due to where the funds originate, and the pool of knowledge and talent found in the student body and the alumni population. School funds are usually in per-established donation funds rather than limited partnership investments, which provide capital without overly abundant dominant terms—the key to control of a company. Many student-run funds are created in graduate business school programs, providing startups with a vast pool of management-centric students to recruit—the key to management talent.
UConn's Hillside Ventures can support startups similarly but more profoundly. Not only does Hillside employs the best of the best from the undergraduate business school, but it also employs the best of the best from its MBA program. Moreover, the fund is open to the entire UConn student body. This ability provides startups with a vast pool of expert knowledge in almost all fields of study—the key to employee talent.
Additionally, UConn has many free programs available to local startups. These programs include counseling for startups, consulting for startups, funding for startups, networking for startups, professional development…etc.
Student-run venture funds are not going away. It is only going to grow. This niche segment in the VC industry is in its early stages. My prediction, most universities with a business school will develop a VC program to stay competitive. VC programs become the access point for startups to tap into many of the university's resources, from a talent pool to recruit to all the fantastic and innovative student programs the university has available.
Michael Finnegan, Managing Director of Hillside Ventures - Hartford / Stamford