The VC in My Dorm Room

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Although Fogarty is taking a board seat, his role at Opient will otherwise be limited, he admits. "My skill set overlaps quite a bit with Opient's," he explains. What he can do, based on his experience as a project manager at Unilever, is help the Opient team put together a plan of action they can stick to.

Fogarty is also spending time with another start-up: OnWafer Technologies Inc. He meets twice a week with OnWafer cofounders Costas Spanos and Kameshwar Poolla, members of Berkeley's engineering faculty. OnWafer has developed a new method for measuring temperature in the supersensitive semiconductor-manufacturing process. It claims the technology could increase chip production by 5% and save semiconductor makers billions. ITU has invested $350,000 in the business.

On a Tuesday in July, Fogarty huddles with the founders in Spanos's neat, book-lined office in a Berkeley engineering building. He's coaching them for a pitch to a new VC for their next round of funding. As Poolla clicks through PowerPoint slides, Fogarty gently pushes him to make the presentation less technical, more explicit -- basic but necessary tips in today's fund-raising game. "You're assuming that the people you're talking to know a lot," Fogarty says. "I think it's important to say that you expect revenues of X million. People have no idea about the size of the market."

Hiring is the other big item on the agenda. Spanos has been searching for more engineering talent, with mixed results. He called two leads that Fogarty had given him, but neither bit. "I felt like I was trying to sell encyclopedias to someone," he says. However, he's ready to make an offer to another engineer. He and Fogarty quickly run through the compensation details. Spanos is doubtful that the candidate will want equity at this stage. Fogarty disagrees. "That's probably why he wants to work at a start-up," he points out, so Spanos decides to limit their offer to 2% equity, max. Fogarty says he'll forward a job description to the other campus partners to see if they know of any good candidates. Can't hurt, Spanos says.

Meanwhile, on the East Coast, Fogarty's counterparts Chu and Harrison are keeping an eye on Isovia, the creation of a team of MIT alumni and graduate students. It's another wireless play, one in which ITU has invested $375,000. Isovia's technology allows massive enterprise software systems to interact with wireless devices. This summer Chu and Harrison have worked their networks to come up with five business-side hires for Isovia, most of them from Sloan or Harvard Business School, with a few more in the pipeline. Now ITU's business-development team is prepping Isovia for a next-round-funding road show.

Such road shows are the real test for ITU, and in that way, the company is emblematic of the new type of venture funds: there's a lot to prove. Will other investors validate the start-ups into which ITU has sunk time and money? And beyond the initial financing rounds, what's the long-term outlook for its portfolio companies? A recent unpublished study from the University of Pennsylvania's Center for Technology Transfer provides a sobering indicator. Managing director Louis Berneman examined the post-initial-public-offering stock performance of 35 companies started around technology licensed from universities. He discovered that as of March 1999, 31 had done worse than the Standard & Poors index. (Berneman's advice to universities that take equity in start-ups: sell as soon as you can after the IPO.)

Consider this, too: MIT, that hallowed hotbed of high-tech start-ups, doesn't necessarily encourage students to launch businesses while in school, says Kenneth Morse, managing director of the MIT Entrepreneurship Center. "You'll fly higher if you know what you're doing, and you won't know what you're doing until you've been out in the market," Morse says. "If someone absolutely must engage in premature incorporation, we strongly advise getting some adult supervision as soon as possible."

On the other hand, there's no shortage of entrepreneurs or wanna-bes on campus these days, and some of them are starting real companies. Business-school professors are embracing the practical side of entrepreneurship by investing in student businesses once the students graduate and by serving on boards. (See " The Profit-Minded Professor," Inc., State of Small Business 2000.) After all these years of coaching players, entrepreneurship professors across the country are itching to get into the game -- if they're not in it already. So why shouldn't ITU play, too?

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