F&A Spotlight: RIT Venture Fund

RIT Venture Fund is a multi-million dollar investment fund that has supported the growth of numerous entrepreneurial ventures over the past three years. Many students and alumni aren’t yet aware of the RIT Venture fund, but its impact is growing.   

Here are five facts that help explain exactly who they are and what they do. The RIT Venture Fund:

  1. Provides investment capital and guidance to innovative start-up companies that have strong ties to RIT. The fund can provide some seed capital to help get your business off the ground or help steer you in the right direction.
  2. Requires strong ties with RIT. Eligibility for funding is restricted to companies that have some affiliation with RIT. Companies that are founded by alumni, faculty, staff, students, and RIT Venture Creation client companies are all eligible to apply for funding.
  3. Invests in a wide variety entrepreneurial ventures, including companies that operate in the financial technology (fin-tech), telecommunications (telecomm), and additive manufacturing industries. All of the fund’s portfolio companies have really unique stories that reflect the depth and breadth of knowledge of RIT’s student and alumni populations. The fund primarily invest in companies that are focused on the creation of new intellectual property in areas that complement RIT’s core academic competencies, such as; imaging, design, sustainability, and technology.
  4. Hopes to enhance Rochester’s growing entrepreneurial ecosystem. The fund made its first investment just 3 years ago and since that time has invested $2.3 million in support of 12 different companies.
  5. Makes investments in companies in various stages of its life cycle, but primarily focuses on companies that are still in the “startup” stage. Other investment criteria include: having an established leadership team, having a product or service that demonstrates a clear market opportunity, having a sustainable competitive advantage, and the ability to provide investors an attractive return.

I sat down with Gregory Van Laeken, the Business Manager and Analyst for Global Programs and an investment manager for the RIT Venture Fund to ask some essential questions:

Will this fund eventually run out of money?

This specific fund is actually named RIT Venture Fund I, anticipating the need to launch additional funds in the future. RIT Venture Fund I was initially funded several years ago from the operating budget of the university. Once all of the money from this fund has been allocated to the various start-up companies in the portfolio we will look for ways to raise additional money and likely start a new fund. That said, our hope is that RIT Venture Fund I will continue into perpetuity as an “evergreen” fund. Returns on our investments will be put back into the fund and used to support new companies and new ideas long into the future. However, on average, it takes nearly 7 years for investments in start-up companies to start paying dividends and our first investments were made just 3 years ago.

How much do you typically invest in a company?

We currently have 12 companies in our portfolio and the average amount invested in each company is roughly $185,000. The maximum amount that we would invest in any given company is restricted to 10% of the overall fund, or $350,000.  We will oftentimes make multiple investments in a company at different stages or once certain milestones have been achieved. The initial investment into any given company is typically in the range of $100,000 to $150,000.  

Why do you think the RIT Venture Fund is important?

“I just think that it is great for the community, in general, to have thriving small businesses. Supporting these start-up companies will create employment opportunities and contribute to the overall health of the local economy. In this region we’re all too familiar with the tremendous success and then the eventual decline of our area’s largest manufacturing employers. But new jobs in innovative areas of the economy are constantly being created by these start-up companies. We hope that the RIT Venture Fund can play an important, albeit relatively small, role in fostering an environment that values entrepreneurship and creativity.”

 

The RIT Venture Fund is a truly interesting aspect to RIT. Check out some of the companies that RIT Venture Fund has supported:

http://www.rit.edu/venturefund/portfolio-companies