A growing number of universities are willing to "preseed," or invest in companies in their most infant stages. Here's an example of someone who was touched by a collegiate angel.
High-tech entrepreneur Bob Allen has donated money to Vanderbilt University since he graduated with an engineering degree in 1966. He recently scored about $250,000 from the Chancellor's Fund -- the school's new $10 million venture capital fund designed to invest in high-tech firms started by professors, grad students, and alumni. Allen is using the seed money to develop Device Newco, a biotech start-up that will build implantable electronic devices such as pacemakers.
According to industry trackers Venture Economics, more than 100 other schools have or are creating such funds. Here's the caveat. Most university-based funds come out of a school's office of technology transfer, and like Vanderbilt, preference is given to companies started by professors, graduate students, or alumni. Know what rights you'd be willing to concede. Many schools may want a piece of your company and your patent licenses. Don't expect to just take the money and run. Schools prefer to be partners, not just investors. These funders are often much more hands-on than traditional venture capitalists. So be prepared for plenty of guidance -- whether you want it or not.