UMass Investment Fund

The UMass Board of Trustees approved the formation of an investment fund in 2006 and this was modified by the Board in 2013. The fund is managed by OTCV (formerly CVIP) in the President’s Office. The purpose of the fund is to permit the University to invest in a new company based on UMass technologies. Investment can be made solely by the University or together with a qualified external venture capital firm’s investment (whether sole or syndicated) and/or an angel investor’s or angel network’s investment.. The source of the funds is money managed by UMass Treasurer.

The fund is managed by OTCV in the President’s Office who selects eligible companies for potential investment.  OTCV also prepares all the necessary documentation and select an external committee of qualified investor to recommend whether or not to invest. The documents and recommendation is then forward to the Treasurer and his/her investment who make the final decision whether or not to invest.

Fund details are as follows:

Fund Restrictions and Characterization

  • UMass Treasurer will make available up to 1% of the operating cash portfolio each June 30 for investment in UMass-technology based companies.
  • Investment will be limited to $500,000 per company including initial and follow on rounds
  • Investment made only in UMass technology based companies
  • Investment can be made solely by the University or together with a qualified external venture capital firm’s investment (whether sole or syndicated) and/or an angel investor’s or angel network’s investment..
  • The University may allow such an external investor to take the lead, establish valuations, form the management team and create the new company. For any co-investment, the terms should be the same for all co-investors.
    • Fund’s initial investment will not be later than Series A round
    • All proceeds from the sale of a company’s equity will be returned to the University’s cash portfolio.
    • Returns in excess of  the principal investment plus normally expected  returns will be made available to OTCV for further development of commercially promising technologies and for the creation of new companies
    • General Counsel will review documentation for transactions although external counsel with securities expertise may occasionally be required. Fund will bear the expense of such outside counsel.

 Operating Guidelines

1. External Investment Board

  • A OTCV Advisory Board will be appointed by the President based on the recommendation of the Executive Director (OTCV )
  • Each investment activity will be presented to the OTCV Advisory Board which composed of three experienced VCs drawn from a pool of appointed VCs and other appropriate investment experts (entrepreneurs, investors)
  • Members of the OTCV Advisory Board will serve on a pro bono basis and at the discretion of the President
  • All potential investment candidates (new company representatives) must present to the Board for their deliberation and may be accompanied by  the external VC co-investor and the OTCV Director
  • Written material must be supplied in advance to the Executive Director and the OTCV Advisory Board which fully describes  the investment opportunity and will include the company business plan, the financing plan, terms of the financing and the cap table
  • All University investments will require the unanimous approval of the Board which will be made in a timely fashion
  • Once approved, investment recommendation will be presented to Treasurer and the Investment Committee for authorization of the investment
  • If not approved by either the OTCV Advisory Board or the Investment Committee, no further action is required although investment candidate may  present again in the future if investment characteristics have been significantly modified

2. Fund Operations

  • Directors (OTCV ) will work with the Executive Director to create a pipeline of potential investment candidates. Executive Director, Directors and their staff will work with investigators, external consultants and entrepreneurs to create new investment opportunities.
  • Where appropriate, OTCV will request support from the MTTC
  • Coordinating with the OTCV office directors, Executive Director will select investment candidates to be presented to OTCV Advisory Board
  • UMass representative may hold an observer board of director seat in a newco for a limited period of time