Written by Mark Lupa
Co-Founder & General Partner,
Buff Gold Ventures
Universities have always had a big influence in venture capital. They provide breeding grounds for new technologies, fed by the billions of dollars in grants from the NIH, NSF, and DOD. The University of Colorado alone receives over $1 billion in grants every year, leading to hundreds of patent filings and about 20 startup companies annually.
Harvard Business School professor Georges Doriot is generally considered the "Father of Venture Capital." He started the American Research and Development Corporation in 1946 and raised a $3.58 million fund to invest in companies that commercialized technologies developed during WWII. Venture capital emerged in the 1970s as an asset class with a growing number of firms on both the East and West Coasts, public policy changes that saw more capital flowing to VC, and an industry transforming into a more institutional structure. Many of these technologies, and people, originated at universities, mainly along the east and west coasts of the US. The leading universities in Silicon Valley (UC Berkeley, Stanford and UCSF) evolved, supporting more entrepreneurial activities and, in turn, shaping the evolution of Silicon Valley.
The Bayh-Dole Act, formerly known as the Patent and Trademark Act Amendments, is a federal law enacted in 1980 that enables universities, nonprofit research institutions and small businesses to own, patent and commercialize inventions developed under federally funded research programs within their organizations. This allowed universities to capture some of the value that was being created in their laboratories, and share it with VC groups. It took a while for universities to truly understand this development, and the magnitude of wealth they could create, but over time technology transfer offices at the most progressive universities evolved into organizations focused on identifying the strongest technologies, and helping those founding scientists take it along the commercialization pathway.
VC funding grew along the coasts, and had a significant effect on universities in those regions. Harvard and MIT on the east coast, and Stanford, Berkeley and UCSF in the Bay area, all became known as deep sources of innovation for VC investors to mine. Consequently, there developed a symbiotic relationship, where VC investors grew their fund size and riches while the universities grew their brands and attracted some of the best faculty scientists and students.
Today, most major universities understand that they must play a dual role in society: educating and nurturing their students for a successful and positive role in society, while also using the millions of dollars in federal grants that they get to identify and nurture the disruptive technologies developed in their labs. Many of these technologies have a significant impact in health care, quality of life, and the changes needed to reduce climate change. In fact, over the past 10 years most major universities have created venture funds to invest in university startups.
Buff Gold Ventures is doing their part in Colorado to bring the best and brightest technologies into the venture community. Our role is not only to provide needed early-stage capital, but also to help nurture the next generation of scientist entrepreneurs. The tech transfer group, called Venture Partners at CU Boulder, has about 20 people focused on finding great new inventions and helping those founding scientists take their inventions and turn them into company seedlings. The role of our fund is to take those seedlings and help them bring together the resources needed to grow into successful companies. You can learn more about our portfolio companies here.
