A new import from the US has arrived in the UK: the campus-based venture capital fund.
, which has so far agreed partnerships with the universities of Sheffield and Manchester, uses students to seek out promising early stage companies in which to invest.
Modelled on established funds in the US, the aim is both to give entrepreneurial students experience of the venture capital world, and provide start-up companies with much needed money at an early stage.
鈥淥ne of the best ways to understand how investors make decisions is to experience that from the investors鈥 side of the table,鈥 says Samantha Deakin Hill, one of the fund鈥檚 founding partners and a mentor at Sheffield鈥檚 enterprise programme.
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Campus Capital will not focus its investments exclusively on student or graduate start-ups, instead looking more broadly at companies in the 鈥渃ity region鈥, explains Deakin Hill. 聽
The US already has a that explicitly invest in student companies, some run by the universities themselves. Prominent among them is the , which only backs companies with at least one full-time student on their founding team.
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Now with investments in , according to the website Crunchbase, it has recently backed a that makes "smart" basketballs that track your dribbling performance, and a claiming to be able to streamline the organisation of school field trips.
There are 鈥渕ore opportunities to invest in student start-ups鈥 in the US than the UK, says Deakin Hill.
鈥淲hat a lot of [UK] universities are very good at is providing early stage proof of concept funding, which will include a small grant,鈥 she explains. But these grants are small indeed 鈥 normally below 拢5,000 鈥 and one of the difficulties for UK start-ups is getting more sizeable chunks of money to be able to scale up their businesses, she adds. Campus Capital hopes to plug that gap by offering investments of 拢50,000 to 拢200,000.
Why, then, do student companies in the UK find it harder to tap into funding opportunities? 鈥淚n the UK we鈥檝e a massive history of invention and innovation, but entrepreneurship? Not so much,鈥 says Sara Pates, head of enterprise at the University of Sheffield.
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UK universities do have funds to commercialise intellectual property, she thinks, but 鈥渢hat tends to be around research鈥, rather than student companies, she says. One such example is the聽 fund, launched in 2015 with 拢300 million of funding to provide capital and advice to help commercialise research that emerges out of the University of Oxford鈥檚 mathematics, physical, life sciences and medical sciences division.
Students, who often lack the connections and experience of more established entrepreneurs, can be a riskier bet when it comes to funding start-ups. Universities may well ask themselves 鈥渨hat鈥檚 the payback?鈥, says Pates. 鈥淪o many [student-led companies] fail." 聽
Campus Capital is currently raising money for a 拢2 million first tranche of funding available from April or May this year. 聽
Alumni may choose to invest as a way of boosting their alma mater, Deakin Hill says. 鈥淭here have been alumni of our current partner universities who have shown interest in giving back to the university but in a way where they could see a return on their investment,鈥 she adds. Some alumni 鈥渁ren鈥檛 interested in having a building named after them鈥, she continues.
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If successful, the scheme could give UK students a taste of the funding opportunities available to some of their counterparts in the US 鈥 but there is still a long way to go.聽
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