The university will anchor a fund led by Silicon Valley entrepreneur Vivek Ranadive that aims to finance UC-generated innovation, according to an announcement by UC officials Tuesday.
The $250 million fund — drawn from the university’s $98.2 billion pool of investment — will support investment in UC faculty and student entrepreneurship. According to UC President Janet Napolitano, the fund will leverage innovations emerging from the UC ecosystem across disciplines such as life sciences, technology, energy, agriculture and materials, and it will help accelerate commercialization of these ideas.
“This is really just a continuation of our investments in venture capital but doing it in a way where we can leverage a competitive advantage that we have which is the UC ecosystem of ideas, and that’s really the unique angle,” said UC Office of the President Chief Investment Officer Jagdeep Bachher in a phone press conference.
The concept was originally approved by the UC Board of Regents in September 2014. Although the university has scrapped the name “UC Ventures” for the fund, Napolitano said during the press conference they are working on developing a name, “which will surely be catchy.”
Ranadive will contribute five percent of what is ultimately raised from outside investors in addition to the $250 million contributed by the university. Although other investors have approached the university, no contracts have been formalized yet.
Returns from the fund will go to the Office of the Chief Investment Officer and to pensions, among other assets. The university’s contribution to the fund does not consist of tuition or state funding.
Ranadive, who arrived in the United States at the age of 17 to study engineering, has founded companies like Teknekron Software Solutions and TIBCO, owns the Sacramento Kings, a National Basketball Association, or NBA, team and has written three books.
“He is a game changer — Vivek — in the realm of big data and real time technology,” Napolitano said at the press conference. “But just as important and perhaps more important, he is a values-driven leader who cares deeply about making the world a better place for all of us.”
According to Ranadive, he had already been looking into creating a values-driven fund grounded in research.
Napolitano said previously the university’s ability to expand into the marketplace from the ideas of students and faculty was somewhat restricted. While in the past, entrepreneurs have had to find capital on their own, the investment fund will enable the university to directly support them, she said in the conference call.
David Charron, a member of the professional faculty at Haas School of Business, said the university is essentially creating a smaller fund to do direct capital investing into UC-related companies.
“(The fund is) very concertedly designed and very well thought through,” Charron said. “It is a venture capital fund so it is naturally risky, but I think it is the right thing to do for them to generate greater returns.”
During the conference call, Ranadive said that more than 800 startup companies with UC patents have been founded since 1980, and that the fund simply gives the university the opportunity to start monetizing its output.
The venture’s goals of supporting student and faculty entrepreneurship and earning a return on investments go hand-in-hand, said Charron.
Ranadive said that to his knowledge, the creation of this fund is one of the largest steps a university has taken to support entrepreneurship through investment.
“This investment says, ‘Let’s marry some of the investments of the Chief Investment Officer with some of the leadership of the world’s leading technology and entrepreneurship,’” Napolitano said in the call. “(Creating) that ready pipeline … will enable the UC to build on what it does already but do so in a much more expansive way.”