The University of New Brunswick’s student venture capital fund has made its first investment.
The Fraser Student Venture Fund is worth about $400,000, according to Faculty of Management Dean Devashis Mitra, with the money having been donated by alumnus and wealth manager Charles Fraser. It has invested $25,000 in geo-mapping startup 3D Planeta.
The fund is managed by New Brunswick Innovation Foundation Director of Investments Raymond Fitzpatrick’s Venture Assessment class. Its creation was inspired by the success of a similar program, called the Student Investment Fund, which focused on publicly traded companies.
“Our faculty had been thinking about this for a pretty long time,” said Mitra in an interview. “We wanted to go to the other end of the spectrum and set up something similar for students, where they could act not as investment bankers, but as venture capitalists.”
Since 2015, UNB has offered a course called Venture Assessment, which teaches students the process of venture capital investment. It began as a one-term course, and for 2019 and 2020, it was expanded to last a full academic year and incorporate the Fraser Fund as part of the curriculum.
When he agreed to donate the money, Fraser asked that it be invested in companies with ties to the university. So, during the summer, the faculty began contacting startups with alumni on their management teams and invited them to apply.
“Any student or professor who has any sort of startup idea, we encourage them to come to class and pitch their idea,” said Fitzpatrick. “We give them feedback and tell them what we’re thinking, and then we either say, ‘You need to go do X, Y and Z,’ or we say, ‘This looks really cool. Let’s do our due diligence and maybe we’ll cut a check.’”
In September, Fitzpatrick’s students began reviewing the applications and conducting due diligence. By December, they pitched 3D Planeta to the fund’s investment committee, which comprises UNB faculty members, representatives from NBIF and members of the local venture capital community.
The approval process, which also required the sign-off of the university’s vice-president of administration and finance, was completed shortly after that.
“This is the thing that we noticed with startups: time is very valuable,” said Mitra. “The company needed some assurance about this, so it was a fairly speedy process from our side.”
Negotiating terms of the investment took until this spring, partly due to the financial instruments used in the startup world being different from what the school’s financiers typically handle, according to Mitra.
NBIF is also making a separate investment in 3D Planeta, as part of a plan to spend up to $100,000 on companies recommended by Fitzpatrick’s students. Unlike the Fraser fund, the NBIF money is not earmarked specifically for companies with an alumni connection to UNB.
Now, a second investment recommendation from this year’s class is under consideration. And Mitra said UNB expects to continue the program next year, even in the face of the broader economic uncertainty caused by Covid-19.
Fitzpatrick added that he remains confident in 3D Planeta’s future prospects, despite the current crisis.
“From the NBIF end, we’re definitely still confident in the company and we believe in the team,” he said. “And that’s from the Venture Assessment side of things, too.”