Here’s a twist on incubator seed fund investments. The Center for Innovation at the University of North Dakota in Grand Forks, N.D., developed a program to educate students about the nuances of angel and venture investing by setting up a venture fund – the Dakota Venture Group – and letting students manage everything from investment decisions to annual reporting. As a result, the students learn private equity investing through experience; the region’s start-up companies gain access to vital seed-stage capital; and the innovation economy of North Dakota grows its entrepreneur and investor base.
In 2006, the Center for Innovation Foundation created a dedicated fund with a $400,000 gift on behalf of the Dakota Foundation, a nonprofit organization fostering social entrepreneurship in North Dakota and New Mexico. Using an evergreen model, where all capital gains are reinvested, the fund provides early-stage seed funding ranging from $15,000 to $50,000 per company. DVG is expected to syndicate with other angel funds, so companies receive seed-stage funding from DVG and go to other investors for future rounds.
To date, DVG has invested in 11 companies, including two student ventures. According to Bruce Gjovig, entrepreneur coach and director of the Center for Innovation, multiples of those investments have returned to the fund.
Keywords: venture capital, angel investors/network, business financing, youth incubation, capital access
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