Venture Capitalists Raise Unique Fund With Profit and Purpose to Benefit UVA, Darden
By Dave Hendrick
University of Virginia Darden School of Business alumnus Sean Foote (MBA ’93) was initially skeptical when his former classmate, longtime friend and fellow venture investor Jonathan Ebinger (MBA ’93) pitched an unconventional idea for partnering on a new fund.
“Jonathan said, ‘I have an idea for a fund. We’re going to raise a fund and then give away our personal profit,’” said Foote, the founder and managing director of Co=Creation=Capital. “Why would I possibly spend my time doing that?”
As Ebinger, general partner at BlueRun Ventures, offered his vision in greater detail, Foote’s skepticism turned to enthusiasm.
“Jonathan won’t say this, but his vision was brilliant on multiple dimensions,” Foote said.
The vision for what has become Transform Capital is this: Ebinger and Foote raise a fund to invest in late-stage venture deals with a promise to donate their “carry” — the profit earned on a future deal — to UVA and the Darden School. Their personal, strategic giving creates a natural affinity among founders and principals with a UVA affiliation, helping Transform Capital gain a foothold in sought-after but hard-to-access later-stage venture deals. The fund is unaffiliated with UVA.
“Affinity is our advantage,” said Ebinger.
Tapping into late-stage fundraising rounds, when a company has long-since demonstrated viability and in some cases is on the verge of going public, is difficult. The ventures often already have their capital needs locked up and are typically bombarded with offers from investors. If a founder or executive of the company went to UVA, however, they may be inclined to make room for an investment from Transform.
“I was trying to find a way to leverage my time and abilities to make a real difference at the University,” said Ebinger. “To launch Transform Capital, I needed the availability of capital from well-intentioned alumni, the support of leadership in the administration, experience in private equity investing, and a strong and willing colleague in Sean. All were key to putting this together, and without any one of them, it would never have happened.”
Their planned philanthropy will only come to pass if the fund is a success, and Ebinger and Foote believe the unique orientation of the fund creates a competitive business advantage. A number of investors, most with a UVA affiliation, have also expressed confidence in the project, and the pair have completed the “first close” on the fund, meeting its preset threshold to begin operating and making investments.
“What Jonathan and Sean are proposing is, indeed, potentially transformative,” said Darden Dean Scott Beardsley. “I applaud their efforts to seek novel, innovative ways to support UVA and Darden.”
The general partners continue to raise money before the fund’s final close.
Some of the fund’s investors are simply attracted by the prospect of outsized returns based on the veteran venture investors’ track record of success, which includes a wide range of successful investments and exits, from PayPal to Pandora. Most love the idea of boosting UVA’s profile in the venture ecosystem and creating a halo effect for the University, its entrepreneurs and its venture creation.
The fund’s investors will also help designate Ebinger’s and Foote’s donation, the pair say.
“I wanted to create a fund that first provided financial returns to investors, thereby enabling philanthropic giving by Sean and me,” said Ebinger.
Foote said the fund delivers on the double bottom line of philanthropy and profit.
“We’ve broken the double bottom line wide open,” said Foote. “The more money we make for our investors, the more money we donate.”
One question Foote and Ebinger have encountered as they raise money: Are there enough late-stage ventures with a UVA affiliation to make the fund viable? The answer is without question yes, the pair say, putting the number at hundreds of potential deals per year.
The investors are not focusing on a particular sector for investment. Generally speaking, they are attracted to companies seeking to reduce inefficiency through technology.
“The overarching theme is to pursue companies that have already found a pain point, are already solving it, so we can add fuel to the fire with our funding,” said Foote.
The fund has already made its first investment in Urgent.ly, a Virginia-based business recently ranked sixth-fastest growing company in North America, according to Deloitte’s 2019 Technology Fast 500.
The University of Virginia Darden School of Business delivers the world’s best business education experience to prepare entrepreneurial, global and responsible leaders through its MBA, Ph.D., MSBA and Executive Education programs. Darden’s top-ranked faculty is renowned for teaching excellence and advances practical business knowledge through research. Darden was established in 1955 at the University of Virginia, a top public university founded by Thomas Jefferson in 1819 in Charlottesville, Virginia.
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Darden School of Business
University of Virginia