New Jersey Institute of Technology (NJIT) community members who want to start a business will soon have access to a $75,000 seed investment from the university’s new Venture Fund as part of a 10-year, $6.75 million commitment funded by the NJIT endowment.
This marks the first time New Jersey Institute of Technology will directly fund startups. NJIT community members have had access to another route, the Highlander Angel Network, since 2013, but that is a group of individual investors, not an official university body. Managers of the new fund said they plan to work together 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. We started with physical space, like VentureLink, and then started investing in programming,” explained Chelsea Samuelson, director of growth and entrepreneurship at NJIT-owned New Jersey Innovation Institute, which will manage the fund. “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 make investments based on a startup company’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 NJIT Fund will receive their shares at a discount. Advisers will include NJIT’s Atam Dhawan, senior vice provost for research.
“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 anyplace to send them, really,” other than making introductions to possible outside investors. 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 the student Entrepreneur’s Society who has a side business making and selling jewelry on Etsy, said she’s excited about the venture capital plan because one of the missions of her club is to connect business-minded students with resources. The junior from Nutley majors in mechanical engineering and has a minor in innovation and entrepreneurship.
“I think it’s great. I think it’s a very natural progression for the university,” Rana said. “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 aimed at minorities and underserved people who are Newark residents.