Founders of Harvard Experiment Fund Talk Goals, Strategy, & Zip Codes

2/2/12Follow @gthuang

Don’t know about you, but I’m less interested in Facebook’s IPO than I am in the efforts of people trying to find the next Facebook out of Boston/Cambridge. One such effort is the new Experiment Fund, based at Harvard University, which I wrote about earlier this week.

Turns out there’s more to the latest seed-stage fund in Boston than initially meets the eye. I had a chance to speak with the Experiment Fund’s co-founders, Hugo Van Vuuren of Harvard and Patrick Chung, a partner at Silicon Valley-based New Enterprise Associates (not that Patrick Chung, that Patrick Chung).

They clarified the goals of the new fund and provided some more context around how it plans to distinguish itself from other similar efforts. I’ve also talked with a number of other early-stage investors around town and have gotten a better sense of how the Experiment Fund is being received locally (more on that below).

First, some mechanics of the fund, which has been in the works for about two years. Harvard has no financial stake and will have no say in the fund’s investment decisions, but it has provided support and office space, Van Vuuren says. He declined to specify the projected size of the fund, but he said it plans to make four to six new investments over the next two years, each in roughly the $100,000 to $250,000 range.

The Experiment Fund has already invested in four companies: Rock Health (see my colleague Wade’s stories here and here), Omada Health, Punch Media, and Tivli. Interestingly, only Tivli is based in the Boston area. Rock Health and Omada are in San Francisco, and Punch Media is in the DC area. They all were started by Harvard students—the key ingredient for now—but the fund intends to invest in teams from other schools around Boston and the East Coast, as well. So I’m guessing its next four investments will be pretty different from its first four, at least geographically.

“We want to meet them here,” Chung says. “We want to help you right here in Boston where the ideas were first born, where the team was put together.”

One issue they wanted to address was the notion that the fund is led by an outside venture firm. NEA is a founding partner, but the fund is an independent entity. Also, Chung is a three-time Harvard alum (undergrad, JD, and MBA) and spends a lot of time in Boston, though he is based in Silicon Valley. Van Vuuren has been in Boston for the better part of 10 years. “In Harvard Square, the maître d’s know Patrick better than me,” Van Vuuren quips. (The two originally met out West when Van Vuuren took part in the Y Combinator startup program some years ago.)

Another thing: Please don’t call it an incubator, or a grant-giving organization, Van Vuuren says. It’s a seed-stage investment fund, plain and simple.

In the coming months, the Experiment Fund will announce other VCs and angel investors that will be working with it. For now, though, the principals are mum on the topic. It has been reported that NEA shares a Boston-based entrepreneur-in-residence, Andrew McCollum (an early Facebook employee), with Flybridge Capital Partners. But Flybridge says it is not involved with the Experiment Fund.

Other local VCs and angel investors I talked to agreed that another seed program in Boston is a good thing for startups and entrepreneurship. They cautioned, however, that any new fund needs to be transparent about where its money comes from; it needs to show entrepreneurs it is committed to long-term funding and mentoring; and it should play the political game of associating with specific universities very carefully.

On the last point, the Experiment Fund is playing up its Harvard connection as a major strength. “NEA and Harvard share, in many respects, a mission to attract really talented people who want to make a difference in the world,” Chung says. No other fund is located on the campus of Harvard with access to its storied faculty, resources, and network, he says.

I asked the principals what has changed about the Boston and Harvard entrepreneurial communities in the past few years. For most of Harvard’s history, Chung says, the school has encouraged finding solutions to major world problems through academic research, medical advances, and political efforts (running for office, say). “Now part of that solution set can be to start a business or start an organization,” he says.

“There has been a groundswell of students interested in changing the world through startups and through technology,” Van Vuuren adds. “The Experiment Fund is here to be helpful. It is here to be a strong part of the ecosystem. Whatever your idea, wherever you are from, no matter your school, we want to hear from you. Because someone in this zip code will change the Internet, transform biotechnology and health, and help innovate us out of the global energy crises.”

So what should we expect to see in the coming year or two? “We want to start small,” Van Vuuren says. “We want to start in Harvard Square, and we want to work up and down the Red Line [subway]. We think 02138 and 02139 are the zip codes that will change America the most in the next few years.”

“The Experiment Fund is itself an experiment,” Chung adds. “We want to be the premier seed-stage fund in the area.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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