Harvard makes space for venture capitalist
With preppy good looks and a casual confidence, Hugo Van Vuuren moves effortlessly among the student body at Harvard University, holding court with undergrads in the Yard or in a Harvard Square coffee shop.
But Van Vuuren, 29, is not a student, or a faculty member. He is a venture capitalist with campus office hours.
From an outpost inside Harvard’s School of Engineering and Applied Sciences, Van Vuuren helps run the Experiment Fund, a roughly $10 million investment pool backed by successful venture capitalists who are Harvard graduates themselves. Harvard appears to be the first university to officially collaborate with an investment firm to target its students while working from an office on campus.
The university allowed the alumni to open shop as part of a larger campaign to help students explore starting their own businesses, before they even graduate.
“We are just helping students figure out what they are passionate about, and how they can change the world,” said Van Vuuren, who has master’s and undergraduate degrees from Harvard and cofounded two start-ups.
More pointedly, it is the specter of Mark Zuckerberg driving these changes on the Harvard campus: Students want to emulate the youthful billionaire’s fast ascent to fortune, and university officials, especially, want to avoid losing another Zuckerberg, who dropped out of Harvard in 2004 and moved to the West Coast to start Facebook.
“The Facebook effect on campus is that kids with a burning desire to start a company have validation,” said Patrick Chung, a venture capitalist with New Enterprise Associates and cofounder of the Experiment Fund. “Because there’s been that sea change in the way that many students think, colleges and universities have to recognize that.”
Although Harvard’s official collaboration appears to be the first of its kind, many colleges are doing much more to help students turn bright ideas into profitable businesses. Classes and concentrations in entrepreneurship are common across academia; elite schools such as Carnegie Mellon and Stanford will even provide start-up funds to student-run businesses, while the Massachusetts Institute of Technology awards hundreds of thousands of dollars annually to student winners of a business plan contest.
This co-mixing is further blurring the distinctions between the business world and campus life, prompting some in academia to question whether in their rush to encourage entrepreneurship, schools are losing sight of their educational mission and risk having even more students abandon their studies.
“We can’t put a wall around campus and dig a moat, but we could start to educate our students more about this,” said Martin Schmidt, the associate provost at MIT. “There’s a recognition that there are an increasing number of external entities that are actively encouraging students to start companies, and in some instances actually leave school.”
For example, another Internet millionaire, PayPal cofounder Peter Thiel, proposed in 2010 to give $100,000 to any young entrepreneur who skipped college altogether to focus on a start-up. Other well-known business accelerator programs, such as Y Combinator of Silicon Valley, have lured promising students away from MIT and Harvard to pursue their commercial ambitions full time.
Faced with the risk of losing more students, Harvard embraced the Experiment Fund as the “anti-Peter Thiel approach,” said Cherry Murray, dean of the Harvard School of Engineering and Applied Sciences.
By aligning with the Experiment Fund, Harvard is able to steer students to venture capitalists with ties to the school, with the expectation that the investors will not encourage them to drop out. In exchange for access to the campus and Harvard students, Van Vuuren and his colleagues will provide mentoring and advice to the students while they are undergrads, but no money until after they have graduated or leave school.
“I am single-handedly keeping people in school,” Van Vuuren said.
Moreover, as Harvard alums themselves, the investors have said they would not pursue deals that would be antithetical to Harvard’s mission, and they hope to encourage more socially minded ventures.
However, there is no express promise by the investors they will stop student entrepreneurs who are intent on dropping out from leaving Harvard; nor would the fund not invest in a promising start-up simply because the founder dropped out of Harvard.
Harvard, meanwhile, does not get any money out of the arrangement. The school will not be an investor in any Experiment Fund deal with its students, or even help decide which would get funded, nor will it receive payments if the business turns out to be a huge success.
During the initial talks, Chung offered Harvard a financial stake in the Experiment Fund. But because of the potential for conflicts of interest, both school officials and the venture capitalists agreed Harvard would not be involved financially. The fund’s other backers include Polaris Partners and Accel Partners, two prominent venture capital shops.
(Presumably, Harvard stands to benefit if a student becomes wealthy because of venture backing and other help while at school and wants to share some of that fortune with his or her alma mater.)
Since the Experiment Fund opened on Harvard’s campus last year, it has received more than 1,500 inquiries from start-ups and entrepreneurs, the majority from Harvard.
So far, the Experiment Fund has provided a small amount of seed money to four companies by Harvard grads, including Tivli, a start-up for college students to watch live TV on their computers, and Zumper Inc., an apartment-rental service.
Among elite colleges, Stanford is probably best known for its entrepreneurial environment.
It is also not uncommon for Stanford professors to help fund students’ companies, or act as go-betweens with Silicon Valley executives. Stanford just announced that for the first time, it will help provide investment money for student start-ups.
But one Stanford official said he could not imagine the school’s allowing a venture capital firm to operate on campus, as Harvard does, because it would conflict with its educational mission.
“We would never invite people in who are directly here to look for companies to invest in,” said Matt Harvey, associate director of the Stanford Technology Ventures Program, the university’s entrepreneurship program at its engineering school.
In some ways, Harvard’s embrace of an on-campus venture fund is an attempt to emulate its more go-go competitor on the West Coast.
Ironically, the venture capital business itself credits its origins to a Harvard graduate, Georges Doriot, and one of his most successful investments ever was the $70,000 he provided to an MIT graduate and employee, Kenneth Olsen, and his partners to start Digital Equipment Corp. in 1957.
Indeed, MIT also has long and deep ties to the venture capital community, and its professors have helped students and graduates start businesses — or even started them together.
As the head of the Martin Trust Center for MIT Entrepreneurship and a well-known business figure, Bill Aulet routinely gets calls from venture capitalists seeking to hold office hours at the school or get other access to students.
And just as regularly, Aulet tells them no, that he does not want students getting too cozy with investors before their studies are done.
“Does that promote an educational environment? I don’t think so,” Aulet said.
On the other hand, many American campuses are filled with business executives and investors.
“Companies are on the lookout for talent much more than venture firms,” said Joseph Lassiter, who teaches entrepreneurial finances at Harvard Business School.
“The primary thing we’re doing is letting students know they have alternatives to investment banking, lawyering, and doctoring,” Lassiter said.