EXOME

all the information, none of the junk | biotech • healthcare • life sciences

UC Entrusts $250M To New Fund For Investment in Campus Startups

Xconomy San Francisco — 

The University of California, which announced in 2014 it would create a venture fund to invest in companies based on its scientific innovations, has finally found the right person to make it happen.  The university system is committing $250 million to a new institutional fund being formed by Silicon Valley tech entrepreneur Vivek Ranadivé, who will work with some degree of independence from UC.

UC spokeswoman Dianne Klein says the agreement came after six months of discussions with Ranadivé, an entrepreneur who in 1986 founded Teknekron Software Systems, the company credited with inaugurating digital trading among Wall Street firms. He’s also the the owner and chairman of the Sacramento Kings, a National Basketball Association team; the author of The Power of Now and other business books; and the father of two UC graduates.

“He’s a big fan of UC,” Klein says.

The multi-campus UC system is a research powerhouse, with 10 campuses and five medical centers. It also manages an investment portfolio of about $91 billion from the office of chief investment officer Jagdeep Bachher. UC created a stir when its Regents approved plans in 2014 to devote $250 million to a new fund with a dual goal: good investment returns and a new source of cash for entrepreneurs whose innovations or teams are rooted in the university.

Fledgling companies started bidding for support right away, Klein says. But everyone was waiting to see who would be chosen to head the new fund, a decision that took more than a year to make. UC wanted a leader who was aligned with the university’s goals—investing early in science-based startups and making long-term commitments to give founders enough time to solve problems in fields ranging from life sciences and agriculture to energy, technology, and materials, Klein says. The fund can accept capital from other sources, whom Klein expects will also be aligned with UC’s plans.

Ranadivé (pictured above) will now hire a chief financial officer and other professionals to staff the new fund, which doesn’t have a name yet. It won’t be called “UC Ventures,” the original name contemplated by the UC system. The fund’s structure will also be “a slight tweak” on the university’s original design, Klein says.

UC had envisioned an independent investing team that would be under the supervision of Bachher’s office. Klein says the Ranadivé fund will not be directly supervised by UC’s Office of the Chief Investment Officer, even though that office is the source of the $250 million investment. Nor will UC have veto power over the fund’s investment decisions, Klein says.

But UC, as the anchor investor in the fund, may have a voice in the choice of portfolio companies. “Certainly, we are working closely with the fund,” Klein says.

Ranadivé is in charge of drawing up a proposed formal structure for the fund, which has yet to be finalized. That being so, Klein couldn’t say whether another of UC’s earlier ideas will be implemented—that the fund would ensure UC maintains a supermajority among other fund investors, if any.

While the fund will focus primarily on startups with ties to UC, it will selectively back larger companies, and will be free to invest in businesses that aren’t linked to UC.

“We want to invest in UC companies, and others, that will make the world a better place,” Klein says.