An NJIT student, professor or alumnus who wants to start a business will soon have access to $75,000 in seed money from a new NJIT Venture Fund that’s part of a 10-year, $6.75 million commitment funded by the university’s endowment.
This marks the first time NJIT will directly fund startups. Community members have access to another route, the Highlander Angel Network, but that’s a group of individual investors, not a university body. Managers of the new fund plan to collaborate with Angel Network members.
“The university has been putting a lot of effort into what entrepreneurship programs we are missing in order to encourage this community to really blossom,” explained Chelsea Samuelson, director of growth and entrepreneurship at NJIT’s New Jersey Innovation Institute, which will manage the fund. “We started with physical space, like VentureLink, and then started investing in programming. That goes a certain distance, but in order to go from an idea to building a company, you really need someone to believe in you enough to give you money.”
The fund team will invest based on a startup’s leaders, the market and the idea itself. The investments will be in the form of a Simple Agreement for Future Equity, or SAFE, which means the startup will receive the investment dollars now and at a conversion event, such as a priced round later, the Venture Fund will receive its shares at a discount. Advisers will include Atam Dhawan, senior vice provost for research at NJIT.
“Wise is a very funny term when it comes to making investments,” Samuelson joked. “This fund is going to seek to become an empathetic partner. We want to build and grow the NJIT entrepreneurship community. We’re going to be taking some risks in investing in some of these companies.”
“We get asked for money all the time, and we never have any, or any place to send them, really,” other than making introductions to possible outside investors, she added. Now, with the new fund, “It’s great for the student body. Knowing you can potentially get access to this kind of money unlocks the opportunity to take a big risk. If your family and friends are unable to provide the financial support to take a year of your life and build your dream company… this money can act as that stopgap.”
Samuelson acknowledged that an interesting question would be what happens if a student wants to leave college to form their company. “That’s going to be an every-situation-is-unique conversation with the students,” but students will be encouraged to stay in school and apply again as seniors, so that funds are available as soon as they graduate, she explained.
Vishva Rana, president of NJIT’s student-run Entrepreneur’s Society who has a side business making and selling jewelry on Etsy, is excited about the venture capital plan because one mission of her club is to connect business-minded students with resources.
“It’s great. I think it’s a very natural progression for the university,” said Rana, a junior from Nutley, N.J. who’s majoring in mechanical engineering and minoring in innovation and entrepreneurship. “It just makes sense to start focusing on funding NJIT students because this is a great advantage that we can have over other schools. It’s a great resource.”
Others in the NJIT community have earned funding from an unconventional source by competing on the television show Shark Tank. Meanwhile, VentureLink recently announced grants for three new entrepreneurship programs for minorities and underserved people who live in Newark.
