Douglas Crawford didn’t get into venture capital to make money.
Nonetheless, the co-founder and managing director of San Francisco-based
Last week, Mission Bay announced an initial close of $7.5 million on a venture fund that will make seed investments in companies with founders or technologies associated with the University of California’s
Over the next year, Crawford and co-director Regis Kelly hope to add additional limited partner stakes, with an end goal of raising $10 million to $15 million. Though he admits they chose a challenging time to raise a fund, Crawford says LPs were generally receptive to the concept of investing in early stage companies based on university research.
“Innovation isn’t slowing just because there’s an economic downturn,” says Crawford, who adds that, given the slow exit climate, “It’s much better to be laying seeds today than trying to harvest.”
Both Crawford and Kelly will run Mission Bay on a pro bono basis and keep their “day jobs” as associate director and director, respectively, of QB3. The fund’s share of carry from successful investments will go back to QB3, either as part of a second fund or to support financial needs of the research institute, which brings together more than 200 faculty from several campuses within the University of California system.
While Mission Bay’s directors may be new to venture capital, they have built a track record for launching startups. Nearly four years ago, QB3 launched an incubator called the
Four of those later closed venture funding rounds, and one, True Materials was bought by Affymetrix for $25 million last year.
Crawford says the new fund has several goals. One is “to make pivotal early stage investments to stimulate creation of more companies.”
Another is to enable startups to develop to the point that they can attract venture capital.
In recent years, Crawford says, there has been somewhat of a retreat from the university by the venture industry, caused in part by funds getting larger and facing pressure to get to commercialization faster.
To foster closer cooperation with VCs, Mission Bay has an investment advisory committee comprised of eight venture capitalists, including Brook Byers, partner at
These days, Crawford says, a startup can get reasonably far on a few hundred thousand dollars. A typical startup requires little space and has modest cash flow requirements.
True Materials, for example, was launched in the QB3 Garage with one founder in a 120-square-foot room, surrounded by benches, with a swivel chair in the middle.
“[The founder would] swivel around the benches and do experiments,” Crawfod says.
The company, which provides genetic analysis products, later grew to nine employees before Affymetrix bought it. —Joanna Glasner