UC forms investing entity to fund commercial endeavors from UC research

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The University of California announced Monday the formation of UC Ventures, an independent investing entity that will fund commercial endeavors developed from UC research.

The UC Regents is set to vote on moving forward with the proposal Thursday. The fund aims to promote student and faculty research while maintaining a competitive rate of return, meaning a comparable rate to those of other UC investments, which will ensure a safeguard against conflicts of interests.

Initially, the Office of the Chief Investment Officer will commit $250 million to the fund.

“UC Ventures is about investing in the UC community, not about encouraging faculty and students to chase products,” said UC spokesperson Dianne Klein in an email. “The university will remain focused on curious investigation and fundamental research.”

UC Ventures will be managed independently from the university while remaining subject to some university oversight, which includes approval of the annual budget, removal and appointment of the fund management, definition of reporting requirements and approval of any new fund investors. The governing team’s members will be required to have no employee relations with the university and to not have any family relations employed by the university.

The idea for the fund grew out of an October 2012 report exploring opportunities for fostering entrepreneurial endeavors.

Adair Morse, an assistant professor of finance at the Haas School of Business, said one conflict of interest may be the metrics by which funds are invested in specific projects.

“The big picture is … to not use the fund to give capital to companies that would otherwise not be funded and use it as leverage to draw attention to the UC and our unique location,” Morse said.

Other universities, such as Stanford University and Cornell University, invest in companies or commercial pursuits that result from campus research.

Over the past 30 years, the Office of the Chief Investment Officer has invested more than $2 billion in venture capital funds. According to the UC Technology Transfer Office, the largest startup sector that has transitioned through the office is the life sciences, followed by the information technology and materials, energy and agricultural sectors.

Beyond the commercial and investment benefits, the university hopes that the fund will promote a general entrepreneurial spirit across the UC system, attract additional talent and leverage UC resources to draw attention to innovation coming from the university.

“UC Ventures is the result of careful evaluation of best practices to develop the most effective investment vehicle to capture the economic value the University of California is creating through its pioneering research,” said UC Chief Investment Officer Jagdeep Singh Bachher in a press release. “Our goal is to build upon the technology commercialization efforts at UC while carefully managing potential risk exposures. We are confident an independent UC Ventures will achieve this.”

Contact Isaac Smith at [email protected] and follow him on Twitter @IsaacGSmith.