some traditional venture-fund backers.
2. Will The Engine outline a clear plan for splitting investments between MIT spinouts and those with no ties to the Institute? “We’d be curious to see how the ‘open’ investment process will take shape,” Glasswing’s Seseri says. “It seems natural to place more emphasis on MIT-backed startups.”
3. How will The Engine ward off potential “negative selection bias” or “signaling” issues? MIT-related startups that don’t get investments from The Engine might have trouble raising money from other venture funds that wonder why the Institute’s not interested in its own teams. MIT’s Schmidt has said the fund’s structure should help alleviate those concerns, since the selection of companies and management of the fund will be handled by “individuals that are not MIT people.” (It might also turn out that the fund invests in very different niches from most early-stage VCs.)
Michael Skok, co-founder and investing partner at Underscore.VC, says there will be challenges for The Engine. But he thinks it’s up to stakeholders in the tech community to support the effort and help MIT and its partners overcome any obstacles.
MIT is “sticking their neck out to do something worthwhile to bridge a gap here,” Skok says. “They have to be celebrated for that.”
