Entrepreneurs scratching to find sources of startup capital in San Diego will soon be getting help from an unexpected source. The Rady School of Management at UC San Diego says it is launching its own venture fund that will use donor funds to make investments of $75,000 to $100,000 in startups commercializing new technologies.
The Rady Venture Fund, which the business school describes as the first of its kind in San Diego, is modeled after the Wolverine Venture Fund, founded in 1997 by the University of Michigan’s Ross School of Business. The Michigan venture fund typically invests from $50,000 to $200,000 in seed and early-stage funding rounds in syndication with other VC firms and angel investors.
“Our objective is to provide hands-on educational experience to UCSD MBA students—not on making returns on our investment,” says Lada Rasochova, a Rady School alumna who put the fund together as director of entrepreneurship at the UCSD business school. Yet Rasochova noted the Wolverine Venture Fund has made some successful investments, notably in Irvine, CA-based IntraLase Corp., and Ann Arbor, MI-based HandyLab, which was acquired less than four months ago by Becton-Dickinson for a reported $300 million. The Wolverine Venture Fund is estimated to have made $2 million on a $300,000 investment in the medical technology startup.
An external advisory board made up of venture investors, entrepreneurs, and community leaders will help provide guidance on the fund and associated coursework. Rasochova says there also are two “safety checks” on venture investments made by the fund. She says a committee that includes venture industry veterans will make investment decisions, and investments only will be made jointly with another VC firm. Rasochova says Rady students will participate in the entire investment process, “so we would prefer to make investments in the San Diego region so our students can help them succeed.”
The program, which is open to both full-time and flex-time MBA students, includes a more academic course in venture finance and investment analysis and what Rasochova calls two “hands-on” classes that enable students to vet business plans, support entrepreneurs, and help manage the fund and its venture investments.
The Rady Venture Fund is expected to make only one or two investments per year in startups focused on high technology or the life sciences, although Rasochova says the fund has ruled out drug development companies because of the extraordinary time and costs involved.
Because the Rady Venture Fund is funded by donations to the business school through the UC San Diego Foundation, Rasochova says any investment returns will revert to the venture fund and the Rady School of Management. If there was a really huge return, she says, Rady School Dean Robert S. Sullivan would decide how any spillover funds would be used.
