Optical Investors Go to College
There's a new kid on campus, and he's out to fund your optical startup.
Last week, Information Technology University http://www.itu.com, a nationwide organization that operates on the campuses of leading U.S. engineering schools, announced a seed investment of $400,000 in Opient, a closely held startup based at the University of California at Berkeley. Opient purports to have a revolutionary technology for speeding up the process of manufacturing optical gear.
Opient is the first optical project to be funded by a small but growing cadre of so-called university incubators. Another firm, called University Angels http://www.universityangels.com, recently launched its own Web-based program for promoting student startups. But so far, it hasn't helped fund any optical projects.
The effort to fund university-based startups is not new or unique to any industry, including optical networking. Optical labs are a well-funded staple of leading engineering schools like MIT and Stanford University, which find them a key attraction for talented students -- as well as lucrative research grants and contracts. And venture capital firms are always on the lookout for promising optical startups. Hummer Winblad Venture Partners http://www.hummerwin.com, for example, is famous for its student business plan competitions. Many campuses have investment clubs, in which alumni, students, and other interested parties can pool donations to fund promising student-led startups.
Two things make ITU and University Angels different from these other efforts: their multi-school scope, and their aggressive efforts to make a business of finding and growing campus talent. Until now, most investment efforts have focused on individual schools. And none has been coordinated by on-campus help.
Both ITU and University Angels hire folk to work for them on campus. ITU has set up a network of so-called Campus Partners, typically high-profile graduate students who know the high-tech industry well and who can find and encourage student projects. Presently, ITU has such folk working at five engineering campuses in the U.S. -- UC Berkeley, Columbia, Harvard, MIT, and Stanford. By the end of this year, spokespeople say, ten more schools will be added.
The Campus Partners help prospects design a business plan, providing suggestions and expertise to attract investors. If the plan meets approval by ITU headquarters, the newbies are awarded seed funding -- typically in the range of $150,000 to $500,000. ITU also helps them get facilities and personnel, and it assists them in shopping their ideas to venture capitalists.
ITU itself has $6.6 million in funding from PCG Ventures, an offshoot of Pacific Capital Group Inc., which owns 10 percent of Global Crossing Ltd. ITU spokesperson Brendan McDermott says this won't affect the choice of venture capitalists ITU links with newbies. "We help them plan a roadshow and introduce them to a number of VCs, not just PCG," he says.
University Angels takes a different approach. It also hires on-campus reps, who can be faculty members as well as grad students. The person helps to establish an online community of interested parties, including students, investors, and vendors, who then serve to advise and guide student hopefuls - and support the online community through paid memberships.
University Angels itself does not provide any funding directly to the students -- although one of its goals is to bring seed partners and startups together. University Angels currently has over 40 community sites set up at colleges nationwide, including Johns Hopkins, Stanford, and Yale. It plans to start 20 more online communities this summer, spokespeople say.
Both ITU and University Angels say optical networking is apt to be a key source of income. "It's a red-hot market," McDermott says. "We definitely hope to have more startups in this field." --by Mary Jander, senior editor, Light Reading (http://www.lightreading.com)