In a VentureBeat article, Tim Schigel of Refinery Ventures discusses how search fund investments could pose attractive opportunities for university endowments to invest in talented entrepreneurs associated with their universities and target strong IRRs.
"In the early 1980s, Irving Grousbeck and his colleagues at Stanford Business School launched a revolution in the way that entrepreneurs and investors fund, manage, and grow mature businesses. Their creation — the search fund — changed the way many investors thought about equity investments, turning fund managers into quasi private equity shops and posting impressive returns as a result."
"Some Chief Investment Officers at major university endowments have shared with me that they are frustrated with the current restrictions they face and that they believe a venture search fund model would solve their structural problems. As a VC that straddles the Valley and the Midwest, another theme that’s always on my mind is how to help propagate an innovation mindset throughout middle America – and universities are often the hub around which innovation ecosystems develop... So I believe it’s time for universities and VCs to start experimenting with this kind of model."
"By partnering with a university’s entrepreneurship office.... these entrepreneur “jockeys” would have the runway to explore their business concepts, and they would be incentivized to license technologies from sponsoring universities. This would give endowments access to high-growth commercialization opportunities and, by partnering with experienced venture capital firms, would mitigate the risk involved in these types of early-stage investments."
Read the full article in VentureBeat.
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