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Posted on Tue, Sep 21, 2010 : 5:55 a.m.

University of Michigan students start nation's first venture capital fund for social benefits

By Nathan Bomey

The University of Michigan's third student-led venture capital fund plans to make its first investment in early 2011.

The twist: The new investment vehicle, called the Social Venture Fund, will seek out investments that will eventually reap financial returns for the fund in addition to societal benefits.

The fund, officially launched in fall 2009, is the third fund led by students at the Zell Lurie Institute for Entrepreneurial Studies at U-M's Ross School of Business. The others are the Wolverine Venture Fund and Frankel Commercialization Fund.

U-M, in a news release, described the fund as the "first of its kind in the nation."

The Social Venture Fund will invest in early-stage companies in southeast Michigan with a focus on companies in several sectors: education, environment, finance, food and nutrition, health and urban revitalization. The investments -- made by a class of some 30 master's students -- will range in size up to $200,000.

The U-M master's in business administration class that is graduating this year has pledged its class gift to the fund, officials said. It was not immediately clear how much money the fund starts with.

“The Social Venture Fund is a natural extension of what we’ve been doing here for over a decade,” said Tom Kinnear, executive director of the Zell Lurie Institute, in a statement. “Combining rigorous and tangible venture capital experience with the more intangible, but critically important, social valuation experiences distinguishes us from our peers in entrepreneurial education.

"We proudly dare students to apply the power of their entrepreneurial spirits in unique ways and students have risen to the challenge with the pursuit of this Fund and its forward-looking vision.”

Successful investments by student-led venture capital groups at U-M include an investment in Pittsfield Township-based HandyLab, which was sold for $275 million to Becton, Dickinson and Co. in late 2009.

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Tue, Sep 21, 2010 : 11:10 a.m.

I agree with Wild Child. It does help when one reads carefully. Great article. We are doing some writing about similar types of investments that involve education technology. You are welcome to blog with us, if you are interested.

Wild Child

Tue, Sep 21, 2010 : 10:59 a.m.

@ Somewhat Concerned So...the statement about HandyLab was to point out the fact that student-run venture funds have had some success with their investments. Look at how the piece starts broad, then narrows down. The last sentence is perfectly relevant. And I will just end it at that.

Somewhat Concerned

Tue, Sep 21, 2010 : 6:56 a.m.

The HandyLab investment was made years ago by the Wolverine Venture Fund. It has nothing to do with the social fund.