The University of Calgary has established Canada’s first pre-seed and seed-stage investment fund for startups focused on child health, a research priority at the university.
“We haven’t found a fund in Canada yet that has this focus,” with the aim to commercialize university research specifically in child health, John Wilson, president and CEO of Innovate Calgary, UCalgary’s innovation transfer and business incubator, told Research Money.
The new “UCeed” investment program also includes an early-stage fund for startups in general health, as well as a private equity fund managed by students as part of their academic courses in entrepreneurial thinking.
UCeed will invest up to $100,000 to $150,000 in early-stage companies, often the crucial first investment in a startup, says Wilson.
Ideas for startups generated by faculty or student research frequently stall because professors are too busy with full-time jobs and students are focused on their studies. UCeed’s investment will enable startups spun from the university’s research to hire their first employee, typically a recently graduated student or post-doctoral researcher.
“With our investment, that company now has got someone working full-time on this idea that might have never seen the light of day if we hadn’t provided this impetus,” says Wilson.
As part of the UCeed program, UCalgary’s affiliated innovation entities will provide other essential support for startups, including R&D space, equipment, professional programming and mentorship. Those entities include the Hunter Hub for Entrepreneurial Thinking and Creative Destruction Lab-Rockies, both in the Haskayne School of Business.
“We’re trying to create a more mature ecosystem where you’ve got the various pieces that every company needs to get started,” says Derrick Hunter, president and CEO of investment management firm Bluesky Equities, and chair of Hunter Hub’s external advisory board.
“I think we’re going to get a lot of researchers who are very accustomed to applying for grants and who have never actually raised equity,” he adds. “This [UCeed program] is going to force a bit of a change of mindset and it’s going to be valuable training for them.”
Students get real-world learning in investment
The Alberta Children’s Hospital Foundation contributed about $5 million to kickstart the investment fund focused on child health. The River Fund at the Calgary Foundation provided about $5 million to establish the general health fund.
Cannonball Sport & Education Foundation and several individual donors contributed $1.5 million to set up the Haskayne Student Fund.
“The focus of the student fund is educational, to create a best-in-class legacy program at the University of Calgary,” says Vincent Chahley, who chairs both Venturion Oil and the UCeed investment advisory group.
A diverse group of 15 UCalgary students, including graduates and undergrads from business, engineering, science and the arts, are managing the student-led fund, with coaching and mentorship from leading venture capitalists and angel investors.
“I wanted to have the hands-on experience in the venture capital world,” says Valeria Marino, a fourth-year honours program business student. “While classes help us understand the theory and concepts behind finance, I believe that an experiential program allows us to better understand the industries and the work required to make investments.”
Marino says she’s learning about criteria for making investments, as well as the links between entrepreneurship, sustainability and finance.
Similar student-led private equity funds exist in a few Canadian universities, including Queen’s, Laurier and Waterloo. There are about 100 such funds in the U.S.
In consultations with student-led funds across North America, Wilson says UCeed’s creators found that most share its vision to establish a network of student funds. Exchanges offered through the network would enable students to work with student-managed funds elsewhere in Canada, the U.S. or globally.
One of the earliest student funds, at Oxford University in the U.K., is now about 13 years old and has grown in value to more than $1 billion, Wilson notes. He expects it will take 10 to 12 years for UCeed’s funds to become “evergreen,” when the return on investments will be sufficient to make ongoing investments without relying on further grants or gifts.
First round of investments made in health sector
In October, UCeed announced its first round of investments totalling about $500,000 across four health sector startups, with many founders tied to UCalgary’s Cumming School of Medicine and the Haskayne School of Business. The companies are:
Wilson says UCeed will see a return on its investment when a successful scaling company secures its first major round of venture capital financing from an investment firm or other traditional sources.
He says UCeed’s plans to establish several more funds within the next couple of years, focusing on startups in energy, social innovation (addressing societal problems), agriculture and advanced manufacturing.
Many startups supported by UCeed will set up in the University Innovation Quarter, an innovation and research cluster being developed adjacent to the University of Calgary. Says Wilson: “Over the next five, 10, 15 years, you’re going to see . . . thousands of jobs in there, and UCeed is really the field that creates that [opportunity].”