Stanford University is going to start directly investing in students’ companies. Stanford is also giving a $3.6 million grant to StartX, a non-profit startup accelerator for Stanford-affiliated entrepreneurs.
StartX founder and CEO Cameron Teitelman tells me Stanford will only invest in StartX companies and alumni companies.
University spokesperson Lisa Lapin tells me Stanford’s investment fund will have an uncapped size. Vice President for Business Affairs Randy Livingston and his office will oversee the school’s investments, and Stanford will not take a lead role in funding rounds.
Stanford Hospital and Clinics will be investing in companies alongside Stanford in the Stanford-StartX Fund; it is the first time the University or the Hospital will have a dedicated fund to invest in Stanford startups.
StartX, which was founded in the summer of 2009 as a student initiative, has three classes of companies per year, and takes no equity from the companies. The accelerator is financially and legally independent from the University. It will receive a $1.2 million grant annually over the next three years from Stanford. StartX companies must have at least one founder with a Stanford affiliation. The majority of StartX companies have a founder who is currently or was previously an undergraduate or graduate student at the school.
Before this, the four year-old program had received $1.65 million in funding from Kauffman Foundation, Microsoft, Blackstone Foundation, Cisco, Intuit, Greylock Ventures, and AOL, so $1.2 million annually is a substantial increase. StartX’s Alexa Lee said the money will go toward adding more full-time staff to support StartX companies and may go toward expanding the program to accommodate more companies.
Teitelman says the program is opt-in for StartX portfolio companies, and that the fund will only invest in companies that have raised over $500,000 with a minimum percentage of the capital coming from VCs and/or professional angel investors. For initial investments, that percentage threshold is 30%. The fund will then keep investing in future rounds where it is permitted. The fund has no cap in terms of total dollar amount it can spend or total companies it can invest in.
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