University of California endowment to form venture platform

  • UC Ventures will invest $250 mln in early stage
  • University of California endowment will hire independent staff
  • Endowment to retain key governance rights 

The University of California endowment plans to staff its venture platform with non-university employees, Klein said. They will not be part of the endowment investment staff, and “they will make their own decisions,” she said.

The UC’s Board of Regents gave serious consideration to the structure and governance of the platform at its May 27 meeting, with members such as Main Street Advisors founder Paul Wachter and David Geffen Co CEO Richard Sherman voicing support for an external management company model, according to a webcast of the meeting.

An independent management company would give the board flexibility to pay UC Ventures staff salaries that are more in line with private market expectations, Wachter said.

“Those people are pure capitalists,” Wachter said. “They work to make their money and they get their 20 [percent carried interest]. They have one hit maybe, and they make a zillion dollars on that hit. If we say, ‘well this is a cool place to work, so we’re not really going to pay you as well,’ I’m concerned about what’s going to happen.”

The University of California will seed the fund with $250 million from its $91 billion endowment. Endowment CIO Jagdeep Singh Bachher will retain key governance rights.

The UC Ventures platform, which was first announced last year, will provide venture capital to early stage companies sourced through the University of California’s campuses, medical centers and research facilities, according to board documents.

The platform will likely deploy between $30 million and $50 million per year. UC Ventures will invest approximately 50 percent of its investment capital in the life sciences sector. Approximately 25 percent will be invested in information technology, with plans to allocate the remainder across energy, materials and agricultural assets, said the endowment’s private equity Director Michele Cucullu during the meeting.