Frequently Asked Questions
What is the relationship between the Fund and UMass Amherst?
While an important part of our mission is to support innovation and entrepreneurship throughout the UMass Amherst community, our Fund and its general partner are independent legal entities that are not controlled by or a part of UMass Amherst or the UMass university system. The services provided to the Fund by the central administration of UMass Amherst are on arm’s length terms.
Can you explain the Fund’s plan to make donations to UMass Amherst?
The typical venture fund pays 20% of any investment appreciation to its fund managers as incentive compensation. This is known as their “carried interest.” Since our Fund does not compensate its managers, we are able to donate that amount to UMass Amherst while still providing our investors with a traditional distribution structure.
What is the nature of the UMass Amherst connection required for your portfolio companies?
Our portfolio companies are typically founded or led by UMass Amherst faculty, students or alumni. On the other hand, the fact that an alum is a member of a large management team is probably not enough. Ultimately, the sufficiency of the UMass Amherst link is determined by our investment committee.
What if the UMass Amherst connection diminishes after investment?
We recognize that early stage companies almost always evolve and we only require the UMass Amherst connection to be in place at the time of investment.
Does the Fund have opportunities for UMass Amherst student engagement?
Yes. UMass Amherst students are an important part of the entrepreneurial ecosystem on campus. They participate in hackathons, take entrepreneurship courses, participate in pitch competitions and often start companies. Some show an interest in learning the venture business and we look for opportunities to expose them to that.
How many companies does the Fund expect to invest in?
Although this largely depends on how much additional funding we raise, we anticipate making 12 to 15 investments over a period of three years.
What types of businesses do you invest in? What won’t you invest in?
Our only express requirement is the UMass Amherst connection. We are otherwise open to investment opportunities that have promise to generate favorable returns for our investors and shed a positive light on the university’s entrepreneurial ecosystem.
Can investors in the Fund pick and choose deals?
No. Investors in the Fund will have an interest in each deal selected by our investment committee.
What form of investments do you make in portfolio companies?
We have flexibility in structuring our investments. We look for equity interests that represent a fair valuation for the risk involved.
Will you invest in portfolio companies in tandem with other investors?
Absolutely. We are very open to investing in syndicates with other investors.
What is the Fund’s legal structure?
Our Fund is a limited partnership organized under Massachusetts law. Its general partner is a limited liability company that is also organized under Massachusetts law. Our general partner has a board of managers that oversees all of the Fund’s operations and also serves as the Fund’s investment committee. See Our Management Team for a list of the individuals currently serving as our board/investment committee. The board was nominated by the Chancellor of UMass Amherst but, in order to maintain independence, a majority of the board was appointed by the holders of a majority of Fund’s limited partnership interests not owned by UMass Amherst.
What are the Fund’s costs?
Our Fund does not pay a management fee. It does, however, incur modest operating costs and pays a market fee to UMass Amherst for administrative services and back office support. Our management team volunteers their services and does not receive a “carried interest” or any other compensation from the Fund.
What are the tax consequences of an investment in or donation supporting the Fund?
Sorry. You will need to raise that with your own professional advisors.
What can I do to help?
We love all input, suggestions and referrals. And we encourage any support you can provide for innovation and entrepreneurship at UMass Amherst.