University of California Creates Venture Capital Fund

http://www.kqed.org/.stream/anon/radio/tcr/2014/09/2014-09-24d-tcr.mp3

The University of California has announced it will create a new investment fund, UC Ventures. The venture capital entity will have $250 million of university money to invest in UC startups. This investment model is unprecedented for UC, and it is raising some questions.

First, the goal of this new fund is to make money, according to UC Office of the President representative Dianne Klein. The University of California does need cash. Even with tuition increases and cut backs, the UC Office of the President predicts a budget shortfall of around $350 million by 2016.

Klein says the investment strategy is about more than money.

“We also hope that the fund will enrich the entrepreneurial culture of the university, it will continue to support basic research, and that it'll also enhance our technology commercialization,” Klein said.

Faculty like Joe Kiskis are concerned with the new investment strategy. He is a physics professor and representative of the UC Faculty Association.

“I feel like what's at stake is the mission of the university," Kiskis said. "Is it going to be primarily to serve the people of California, or is it going to shift to be more like a private university and try to fund itself via schemes like this?”

Kiskis is referring to venture funds at private universities like Harvard and Stanford. He worries about conflicts of interest -- that professors will prioritize startups over teaching and push graduate students to work on products instead of basic research.

He says this is why UC used to have guidelines to prevent just this kind of investment. But UC President Janet Napolitano rescinded those guidelines earlier this year. Still, guidelines or not, Klein says the UC system intends to move forward responsibly.

“As far as conflicts of interest go, there will be very strict guidelines that are put in place. I don't have a guideline to read to you yet because it's far too early,” Klein said.

The new fund is technically independent even though UC will supply it with money and appoint an independent body of advisers. The fund is tentatively set to begin investing in January of 2016.