Did you know that the University of Minnesota not only provides business expertise and technical support for startup companies based on UMN research, but for qualifying startups, it also serves as an investor? The Discovery Capital investment program, jointly managed by the Technology Commercialization Venture Center and the Office of Investment and Banking (OIB), helps to accelerate the process of turning breakthrough research into commercial products by providing startups the seed funding needed in the highly critical early stages.
The UMN Board of Regents approved the Discovery Capital program in 2015 at a level of $2 million a year for 10 years. Since then, it has invested $5.37 million in 15 startup companies, across a wide range of fields, including biotech, clean tech, rare earth metal replacement, medical software, medical devices, agtech, edtech, geothermal heat pumps, and NK cell cancer therapy.
"Discovery Capital gave CoreBiome a major early boost. Their support helped solidify interest from other investors and helped us close our seed round quickly and with exactly the funding and guidance we needed."
Dan Knights, founder and CEO of UMN startup CoreBiome
The biotech sector is an increasingly hot area for UMN startups and Discovery Capital. Two recent UMN biotech startups that received Discovery Capital funding were acquired by other companies: CoreBiome (Dan Knights, Kenny Beckman, Daryl Gohl) and B-MoGen (Branden Moriarity).
Dan Knights, associate professor in the BioTechnology Institute and the Department of Computer Science and Engineering and founder and CEO of CoreBiome, said that Discovery Capital investment came at just the right time and played a critical role in the company's ultimate success.
"Discovery Capital gave CoreBiome a major early boost. Its support helped solidify interest from other investors and helped us close our seed round quickly and with exactly the funding and guidance we needed."
Discovery Capital invests in UMN startups that submit a business plan and make a successful pitch to a volunteer advisory board. Some of the factors that influence the decision to invest in a company include: potential market size for the product, the competitive landscape, the quality and business acumen of the leadership team, how close the technology (science) is to commercialization, what hurdles still remain, and whether matching funds, a requirement of the program, have been secured.
Stuart Mason, chief investment officer for OIB and the person responsible for making final Discovery Capital investment decisions, highlights the value the program brings not just to the University but to the larger society.
"One of the most interesting aspects of the Discovery Capital program is the diversity and the creativity of innovative product solutions that are being developed to address truly enormous unmet needs by society and the global economy," said Mason.
Discovery Capital is managed by Mary MacCarthy, MBA, the Venture Center's venture program manager. She identifies startups that are raising capital, works with them on their pitch deck and delivery, shares resources to help innovators understand cap tables and the capital raising process, and drives the due diligence process. A unique, very valuable feature of the evaluation process is the Discovery Capital Investment Advisory Board, which consists of 28 professional venture capital managers, corporate venture capital managers, and successful entrepreneurs. This board offers advice on which startups to invest in and under what terms and conditions.
"We have learned a lot over the past seven years," said MacCarthy "We are currently evaluating ways the program and process could be strengthened to further the U's mission."
Money for Discovery Capital comes from previous UMN licensing income, ensuring that income from successful technologies is cycled back into the system that supports new ideas and promotes UMN innovation.
Interested in learning more?
If you are a UMN innovator or potential startup executive who is interested in an investment from Discovery Capital, visit the Discovery Capital web page and email email@example.com to receive more information and schedule a meeting with the Discovery Capital manager.