Universities Dive Deeper Into Venture Funds for Their Startups

Universities in the United States produce more than 800 startups per year according to the Association of University Technology Managers (AUTM). But outside of a few major metropolitan areas such as San Francisco, New York and Boston, startups in many university cities struggle to locate angel investors or venture capital funding. Furthermore, many of these startups are run by inexperienced academics and are commercializing complex technologies that are difficult for investors to understand.

The Washington Post recently ran an article “Universities are venturing into new territory:  Funding start-up businesses” describing some of the efforts by universities to create venture capital funds focused on supporting university affiliated startups.

Last year the University of California system announced the formation of a $250 million venture fund focused on university spinouts. The money comes from the $90 billion pension fund and endowment that the University system holds. Like many pension funds and endowments, the University of California invest a small portion in high risk venture capital funds.

The University of North Carolina at Chapel Hill recently announced the $10 million Carolina Research Venture Fund which will commercialize technology developed at the university. This year Virginia Tech announced formation of the Virginia Tech Investors Network (VTIN). This angel investor network, not a fund, will look at investing in startups out of Virginia Tech as well as startups affiliated with Virginia Tech alumni.

Time will tell how well the recently formed venture funds perform. The Washington Post article states that venture funds have yielded, on average just under 10% over the past 10 years but that the successes were produced by a small number of venture funds. The primary challenge for the university affiliated funds is to become one of the minority of funds that produce positive returns.

The university affiliated startups provide some advantages. The technologies they are based are typically based on years of research, truly innovative and have some degree of patent protection. Those features can provide a solid barrier to entry and provide a higher valuation when the company is sold. On the other hand, the majority of the university spinouts are run by faculty with little business experience or young students. The new university affiliated funds may have difficulty producing positive returns unless they can ensure that the startups address the common management experience problem.

Startup.Directory Companies Attending Plastics Conference

NPE2015: The International Plastics Showcase will take place March 23 – 27 in Orlando, Florida. The conference encompasses 1 million net square feet of show floor showcasing, 2,000 leading suppliers in materials, equipment, processors, and services for the plastic industry. Over 60,000 will attend the five day event.

New this year, SPI: The Plastics Industry Trade Association along with Startup.Directory have formed Startup Garage. Currently there are 15 startup companies being featured in the Garage. Five of the companies are university startups that are included in StartupDirectory. The Startup Garage will encompass startups dealing in all areas of plastics including bioplastics, recycling, 3D printing, polymerization, resin processing, antimicrobial polymers, and graphene.

Companies dealing with graphene include Graphenics from the University of Alabama and Garmor from the University of Central Florida.  Graphenics is working to produce high grade graphene. While Garmor is producing edge-functionalized graphene oxide that can be used in solar cells, water based lubricants and much more. Their process is accomplished by using new milling technologies with water being the only by-product.

Coming out of the University of Arkansas is TiFiber who began by working with Titanium Dioxide Nanofibers and have expanded to Antimicrobial Polymers. Antimicrobial Polymers can be used in cosmetic preservatives, chronic wound care, textile treatment and other applications. Moving past the manufacturing side of the industry is a company which provides market intelligence for a variety of raw materials. GlowLit from Columbia University is a web based pricing database.

Another company from the University of Arkansas is cycleWood Solutions. cycleWood Solutions is a manufacturing company born from a student MBA assignment. The company is creating 100% compostable bags from lignin. They are currently producing a Xylobag which decomposes to humus in 180 days after reaching the natural environment. Single use bags, liners for trash cans and others products are produced from Xylomer pellets which are a proprietary blend of polymers and additives. To achieve this product, the company uses standard compounding equipment and existing converting equipment.

The Startup Garage will provide industry leaders some of the latest technologies coming out of the universities along with other traditional startup companies. Gerard Eldering, editor of Startup.Directory, will also speak on Mining University Innovations & Startups and Plastic Industry Startup Company Highlights at the conference.