Stanford University Is Going To Invest In Student Startups Like A VC Firm

Stanford University is going to start directly investing in students’ companies. Stanford is also giving a $3.6 million grant to StartX, a non-profit startup accelerator for Stanford-affiliated entrepreneurs. University spokesperson Lisa Lapin tells me Stanford’s investment fund will have an uncapped size, and the school will be “opportunistic” as it invests in students’ startups. Vice President for Business Affairs Randy Livingston and his office will lead the school’s investments, and Stanford will not take a lead role in funding rounds. Stanford Hospital and Clinics will also be investing in companies, although not necessarily alongside Stanford University. It is the first time the University or the Hospital will have a dedicated fund to invest in Stanford startups. StartX, which was founded in the summer of 2009 as a student initiative, has three classes of companies per year, and takes no equity from the companies. The accelerator is financially and legally independent from the University. It will receive a $1.2 million grant annually over the next three years from Stanford. Before this, the four year-old program had received $1.65 million in funding, so $1.2 million annually is a substantial increase. StartX’s Alexa Lee said the money will go toward adding more full-time staff to support StartX companies and may go toward expanding the program to accommodate more companies. This is obviously great news for StartX, a very young program that seems to be quickly improving. The accelerator’s biggest challenge is that Stanford entrepreneurs have so many other opportunities, on campus and off. With dozens of classes dedicated to entrepreneurship every quarter and an alumni network that connects students to billions in venture capital and some of the brightest mind in the tech industry, some of the most ambitious entrepreneurs will eschew StartX for anything from Y Combinator to simply raising $80 million on their own. Nonetheless, StartX seems to be gaining more traction and prestige on campus. It saw seven alumni company acquisitions in 2013, including Luma selling to Instagram, Apple buying WifiSlam, and Yahoo nabbing Loki Studios. Disclosure: I’m still a student at Stanford. AOL, which owns TechCrunch, supports StartX in various ways, including financially.