Plenty of startup companies founded by University of Nebraska-Lincoln students and alums have grown up into huge successes.
Think Hudl or opendorse or Virtual Incision.
But could they have grown faster or bigger if they had more access to capital early on?
After Emily Kist had an internship with Nelnet and the Nebraska Angels in 2020, she pondered a similar question. Could the university do something to not only help those early stage companies but also give students more opportunities on campus to learn about venture capital investing?
After her internship ended, Kist got to work answering that question.
The finance major started talking to university officials, community members and others about whether they would support the idea, “and I got a lot of yeses,” she said.
Kist also happened to meet another UNL student, Adam Folsom, who had the same idea.
At the same time, someone else on campus was working on a similar concept.
Joe Petsick, who co-founded Omaha-based online auction company Proxibid, had been hired a few years ago as entrepreneur in residence at UNL.
He said a big part of his job was to look at the College of Business through an entrepreneurial lens and seek ways to get the Center for Entrepreneurship better connected to both the startup and overall business communities.
One of the areas he immediately identified where he thought the university could make a bigger impact was in venture capital investing.
“Probably one of the largest complaints you’ll hear about our ecosystem is related to a lack of available capital,” said Petsick.
While things have improved over the past few years in terms of money available at the seed capital stage and later, there is still a gap when it comes to early stage capital.
Petsick said he realized a UNL venture capital fund could solve two problems. It would provide needed capital for early stage companies that may not access it otherwise, and it would provide more opportunities for students to learn about how the venture capital process works.
And it also would put UNL on par with the hundreds of other universities that have venture capital funds or formal programs, including the University of Nebraska at Omaha and most of the schools in the Big Ten.
As he moved further along in the process, he found out about Kist and Folsom and their similar efforts.
Petsick said he eventually took the idea to Kathy Farrell, dean of the College of Business, “and she immediately agreed that it was a good idea and we should try to pursue it.”
He said the decision was made to create an “evergreen” fund, which essentially means that any profits go back into the fund to be used for future investments.
Petsick said he then got in touch with Invest Nebraska, which is a public-private partnership that invests in early stage companies in the state.
Ben Williamson, principal and general counsel of Invest Nebraska, said it wasn’t the first time he’d fielded a proposal for a student venture fund.
“It would come up every once and awhile and for whatever reason it never got any traction,” Williamson said. But the idea seemed to have better footing this time, largely because “the startup ecosystem is in a more mature place.”
Williamson said he told the organizers that if they could raise the funds and get the needed buy-in from the university and the startup community, then Invest Nebraska would be willing to act as sort of a sponsor, providing oversight and advice to the students on elements such as how to structure deals.
The Husker Venture Fund officially launched last fall with nearly $1 million in capital raised from businesses and individuals, many of them alumni of the university. More than two dozen students were chosen to participate in the inaugural version of the fund.
Its goal is to focus on companies affiliated with UNL, with a priority given to student-founded firms.
Last month the fund it made its first-ever investment, $25,000 to Sentinel Fertigation, a company started by Jackson Stansell, who’s pursuing a doctorate in biological engineering at UNL.
Stansell, whose company uses technology to make nitrogen fertilization more efficient, said he was impressed by the vetting process he had to go through.
“They asked some of the best questions I’ve gotten in my entire investment or fundraising process,” he said.
Williamson said he’s been pleasantly surprised by the professional work done by the students. He was prepared to have to do a lot of hand-holding, but that has not been the case.
“Honestly, Adam and Emily have done all the hard work, and we’ve just kind of tried to support them along the way,” Williamson said.
Kist, who is one of the managing directors of the fund along with Folsom and Keith Nordling, said the goal of the fund is to provide four $25,000 investments each academic year, and although it probably won’t reach that goal this year, it is looking to finalize a couple more deals before the end of the semester.
Kist said that while it would be nice to fund a company that turns out to be as successful as Hudl, the students and their advisors understand that what they are doing is early stage investing, and they may have more failures than successes.
“It’s just really fun to support founders and help them get to that next stage of growth, and so we kind of have that mindset when we go into each investment,” she said.
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John J. Pershing
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On Twitter @LincolnBizBuzz.
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