This article appears in the Fall 2018 issue of Silicon Slopes Magazine.
By Peter Harris, Partner, UGF & Jeramy Lund, Managing Director, UVF II
Utah is home to two unparalleled organizations and opportunities for students: the world’s largest student-run venture fund and largest student-run impact investing fund. These two funds – University Growth Fund (UGF) and University Venture Fund–Impact Investing (UVF II), respectively – blossomed from the same roots, but have grown to offer two distinct and valuable investment funds and student experiences. How did Utah become a leader in equipping the next generation with skills and experience in investing?
The original University Venture Fund (UVF) started in 2001 as a club of students who conducted due diligence for local venture capital funds. James LeVoy Sorenson and his son, James Lee Sorenson, approached the group to donate the initial seed capital to help the club launch University Private Equity Summit, a professional level, student-focused annual conference that was attended by students from around the world for over 12 years. Ultimately, the group raised an $18.2M fund, and with Jared Hutchings and Mark Campbell as the original managing directors of UVF, the fund started making investments in 2004. Investors included UBS, Wells Fargo, Morgan Stanley, Tim Draper, Dinesh Patel, and many others in the community. The fund had many early wins including investments in Omniture and Infinera.
In 2007, Hutchings and Campbell sought to pursue other endeavors and Tom Stringham was brought in to manage UVF. As a Utah native and University of Utah graduate, Stringham brought a wealth of experience from his time back east at Harvard Business School and his time as an investment banker at Merrill Lynch. Stringham worked closely with one of the students at UVF at the time, Peter Harris, to revamp fund operations — in 2009, when Harris graduated from Brigham Young University, he joined UVF full-time. During their time together at UVF, the fund climbed to 24 investments and realized over 10 successful exits, including Control4, Instructure, TrustedID, American Achievement and others.
As UVF’s first fund came to a close, the board and management decided to expand the opportunities available to students by launching both an impact fund and a venture/growth fund, completely independent of each other, resulting in the creation of University Venture Fund – Impact Investing, run by Jeramy Lund through the Sorenson Impact Center at the University of Utah, and the University Growth Fund (not affiliated with any particular schools), run by Tom Stringham and Peter Harris. Though completely separate organizations, both draw heavily on the experience and programs created at the original UVF to create the world-class experiences they offer students today.
UNIVERSITY VENTURE FUND – IMPACT INVESTING (UVF II)
Due to interest in impact investing from students and board members like Jim Sorenson and Geoff Woolley, the University Impact Fund was formed in 2011 by Lewis Hower and Patrick Mullen. This fund was never capitalized as an investment fund but became part of the foundation for the Sorenson Impact Center, an organization focused on educating the next generation of social leaders while solving problems using a combination of innovative financial approaches, data analytics, and policy solutions.
UVF II is a logical extension of the University Impact Fund and is headed by Jeramy Lund, a graduate of the University of Utah and Harvard Business School. Jeramy was previously at JP Morgan and brings a background in philanthropy and angel investing, having invested in many startups and started several non-profits in Utah. UVF II’s design closely echos its heritage from UVF by utilizing the student-centric model for due diligence. However, UVF II has the additional support of the Sorenson Impact Center and David Eccles School of Business at the University of Utah to further the student experience. Currently, Jeramy Lund, Chance Murray, Anders Aabo, Henry Alvarez and Abby Ivory comprise the UVF II management team.
As a highly-competitive experience, University Venture Fund II provides an opportunity for students interested in impact investing, venture capital, private equity, and entrepreneurship by making socially impactful investments in companies and ideas with a Utah-centric focus, but encompassing the greater Intermountain West. The fund’s investment committee and management team source deals, and oversee students as they prepare due diligence, including market research, impact measurement, and program-related investment (PRI) compliance. Students receive intensive training and mentorship throughout the process, and ultimately present the investment committee with an investment memorandum and a deal pitch. The investment committee makes the ultimate decision to pass or move forward.
Impact investing is a rapidly-growing field: in 2017, impact investing was estimated to be a $114B industry and is estimated to grow to $1T by 2020. UVF II champions this movement and targets investments in companies based in Utah (and beyond) that are seeking positive social and financial performance,, providing benefits for low- to moderate-income individuals while having the potential to scale using traditional capital markets.
In December 2017, the fund had a first close of $8.2M. UVF II leads or participates in seed-stage to late-stage private equity rounds as well as providing social impact debt to companies and municipalities. To date, UVF II has screened 70 companies and is close to making its first investment. Stay tuned for a press release soon announcing this investment.
UNIVERSITY GROWTH FUND (UGF)
Founded in 2014, UGF has had over 200 students help deploy capital in over 30 companies from its $32M fund. UGF students are heavily involved in the due diligence and investment decision making process. They also help track portfolio companies, report to UGF’s investors, and provide a variety of value-added services to UGF portfolio companies.
The UGF experience is very hands-on and requires a significant commitment of more than 20 hours each week from students — for those that make that commitment, the payoff is huge. Since inception, 100% of UGF students have job offers at graduation, many of which come from the most prestigious investment firms and tech companies around the world.
Today, UGF continues the investment strategy executed by Tom and Peter while they operated UVF I, focusing primarily on growth-stage companies in the technology and consumer sectors. Investments include local favorites like Health Catalyst, Simplus and Canopy Tax, as well as other brands such as Spotify, 23andMe, Postmates, Pinterest and Lyft. They participate as early as a Series A round and as late as a pre-IPO round. Investing in this broad range of sectors and stages gives students the opportunity to learn from many different types of companies, entrepreneurs and investors, while also providing a very diversified portfolio for UGF investors.
Investing in More Than Just an Education
Whether it’s investing in businesses that lift people out of poverty, or those that use technology to change our lives for the better, UVF II and UGF are proud to call Utah home and provide access to their opportunities to the thousands of students that live and study here. Students across Utah’s public and private universities are integrally involved in deal sourcing, due diligence and making investment decisions for the funds, an educational opportunity unmatched in size, scope, and depth by any funds in the world. You can learn more about UVF II at www.uventurefund.com and UGF at www.ugrowthfund.com.