Minnesota University switches gears towards a seed investment fund with a focus on technology transfer.
Minnesota University has dropped its plans to create two venture capital funds worth a combined $70m. Instead, the institution will set up the Discovery Capital Investment Programme, a seed investment fund.
The programme will make individual investments up to $350,000 into early-stage companies commercialising university research. The original plan had been to set up both a $50m venture capital fund to invest throughout the US and a $20m fund focused on spin-outs. It is not known whether money for either of these two funds had already been raised.
The shift follows recent economic downturns, which have made managing a venture capital fund financially unviable. The university is hoping it will be easier and more cost-effective to instead focus on raising matching equity from third parties. It is expected that two to three businesses will be given funding a year, although the total size of the available funding has not been disclosed.
Eligible companies will be chiefly in six areas: medical devices, pharmaceuticals, energy and the environment, software, as well as food and agriculture. A startup must present a business plan and have management in place. Another condition is that outside, matching equity be raised before approval will be given by the programme’s board of advisors.
Funding for the programme will come entirely from royalties paid to the university through past commercialisation and licensing.
