The New Wave of Venture Capitalists

The New Wave of Venture Capitalists

With images of unicorns dancing in their head along with signs of many more realistic opportunities to realize a sizable return on today’s ever-growing list of disruptive startups, more organizations are getting into the venture capital game.

From universities and corporations to groups of billionaires working together, venture capital is becoming more specialized and focused on fueling growth in certain areas and generating the next revolution of technological change to help address some of the world’s largest issues.

Power Players

The Breakthrough Energy Ventures Fund is an example of what happens when many billionaires collaborate on creating a venture capital fund to help make strides in helping address climate change in a more effective way. This fund includes power players like Bill Gates, Jeff Bezos, Richard Branson and numerous other billionaire entrepreneurs who believe they can do more together to help fund those startups out there with incredible ideas focused on improving the environment.

For these investors, it’s not about banding together to throw a ton of money at helping the environment. Gates realizes that this approach has never worked so the team is committed to guiding these startups and working closely to reach solutions more quickly. With the funding as well as the access to the business acumen, research experience, and technical know-how of the power players involved, there is hope that this new wave of venture capital generates clean energy success.

University Connections

While Gates noted that it was important to get these projects out of university laboratories and into real world applications, there is still considerable value in the venture capital funding that more universities are offering startups in conjunction with the increasing number of educational institutions establishing entrepreneurship centers and programs on campus.

The work that has been done within the entrepreneurship centers led to the idea that faculty could encourage students to turn the ideas they generated during their class projects into actual startups. This then gave rise to the university funding these ideas through endowments or partnerships with other organizations. Over the last few years, this has been a trend that has increased with more money being offered by top universities around the country and the world. The idea is that the universities can also be rewarded should these business ideas become successful and provide returns for those investments.

This includes the University of California system that created a multi-million dollar venture capital fund that invests in companies related to the system’s medical centers, research labs, and schools. Completely managed by the university, the venture capital fund takes advantages of the ongoing research and available research and business talent within the system to help these students create and build out their startups.

Other universities have followed suit, including the University of North Carolina at Chapel Hill with its Carolina Research Venture Fund. The University of Michigan has the Wolverine Venture Fund that is run by students and receives gifts from donors to maintain it. The fund has helped 22 companies since its inception in 1997 with successful companies giving back to the fund to help other startups.

Enhanced Corporate Approaches

A new way in which universities are working with startups in the venture capital space is to by bringing the benefits of university-led accelerators to the corporate accelerator model. One of the highest-profile examples of the traditional corporate-sponsored model is Disney’s partnership with 10-year-plus accelerator veteran Techstars, which helped run and facilitate the Disney Accelerator for two years. Techstars and Disney parted ways at the conclusion of their two-year contract in 2016, and Disney is now running the accelerator on its own. But the corporate partnership model continues to attract the attention of large corporations.

There is a new accelerator taking advantage of the opportunity to enhance this model by interjecting the unique resources the university model has to offer the startup community. University collaboration brings increased funding, greater real-world experience for students, and the research capabilities and resources of the university to deliver more diversified venture capital funding programs that have the potential to perform exceptionally well.

Companies in various industries that are seeking more innovation for their own organizations and see student entrepreneurs as a promising addition to the ecosystem will benefit from this approach. For example, Ameren Corporation, an energy company, has partnered with University of Missouri SystemUMSL Accelerate and Capital Innovators to invest in energy tech startups through the Ameren Accelerator. Dan Lauer, founding executive director of UMSL Accelerate believes this new approach both “de-risks the program for corporate partners and provides more benefits to entrepreneurs to assist in scaling and monetizing innovation,” as well as tech transfer licensing opportunities.

This is the first year for the program. Five to seven startups will be selected to develop their ideas on new energy technologies such as improving the energy grid. These types of venture capital programs are designed to help deliver innovative solutions for companies and provide entrepreneurs direct access to corporate sponsor resources. The Ameren Accelerator includes a $100,000 investment for 8 percent equity, plus technical support, networking opportunities, mentoring, the help of student interns, and access to the university facilities.

Beyond just providing capital, these programs stimulate new jobs and companies to boost the local economies. Lauer contends that these programs are also designed to “accelerate” the learning experience for participating students in a supportive environment that will set them up for greater success in their own future entrepreneurial endeavors.

It just illustrates how far the concept of venture capital has come from doling out money and waiting for a return to a more of a structured program that leads the entrepreneur through the process, helping to increase the likelihood of success and that desired return.

This new wave of venture capital has also become a game changer in terms of stimulating more jobs and improving economies wherever these venture capital clusters are setting up shop. It’s clearly moved beyond the unicorns even though everyone can’t help but to still love them!

This post is part of our contributor series. It is written and published independently of TNW.

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