For about a decade, Union College has had a sleepy venture fund of $500,000, but not many people, including Union alumni, knew much about it.
That's about to change.
“The goal is to get bigger,” said Les Trachtmann, chairman of the Eliphalet Nott Society, which operates the Vash Venture Fund. “Things are beginning to accelerate. We are vetting more opportunities than ever and the members are generating investment opportunities every month.”
The Vash fund was formed by the late Arthur Vash, a member of Union's class of 1951. Vash was president of two companies: Epco Packaging Products Inc. and Phillips Screw Co. After retiring, he started a venture fund, Gryphon Ventures in 1985 with $33 million.
The Vash fund received a $200,000 pledge from its namesake in the early 1990s. His estate provided the funds in 1998, three years after Vash died.
The fund is managed by the Eliphalet Nott Society, an organization formed in 1992 and named after Union's fourth president who led the college from 1804 to 1866. He was the longest-serving Union president. Its goal is to foster an entrepreneurial spirit among students, faculty and alumni.
The 21 members of the society, most of whom are alumni, include presidents and CEOs of companies who have agreed to lend professional and financial support to Union.
Members pledge to donate 2 percent of their holdings in member-owned companies or investments after what they call a “liquidity event”–when stocks are sold or a company is acquired or goes public, for example. Members of the fund can also donate directly to the fund as a charitable gift to the college, or pledge the interest from one of their investments. They can also make individual investments.
The fund is now worth $500,000, the largest it has been. The immediate goal is to increase the fund's size to $2 million. By 2010, investors expect the fund to be valued at $10 million–both in available funds and money already invested in companies.
Union owns any investments made; the society acts as investment manager.
The fund has made four investments to date. The investments are between $25,000 and $50,000, small by venture capital standards.
“We invest at a time when angels would be investing, Trachtmann said.
The Vash fund invested $50,000 in Cyclics Corp. of Schenectady six months ago, not so much because the resin maker needed the money, but because the Union alumni wanted to support fellow former students who founded the company, Trachtmann said.
John Ciovacco, 41, one of the Cyclics' founders, is now a member of the Eliphalet Nott Society and an investor in the fund.
Investments made easy
Union is not the first college to have a venture fund or invest in companies. In 1968, Grinnell College in Grinnell, Iowa, invested $300,000 in alumnus Robert Noyce's startup in Silicon Valley–Intel.
Mark Heesen, president of the National Venture Capital Association in Arlington, Va., said more schools–the University of Michigan, the University of Maryland and Cornell among them–are engaging in this type of investment.
Trachtmann, chairman of the Eliphalet Nott Society for the past year, is president of Active Endpoints Inc., a software company based in Shelton, Conn. When Trachtmann, a 1977 Union grad, joined the society, it had just eight members.
“I got excited about it when someone showed me what it was,” said Trachtmann.
Union has increased its emphasis on entrepreneurship by weaving the subject into its courses and hiring local businessman Harry Apkarian as its first Entrepreneur in Residence.
Bill Schwarz, Union's director of communications and public affairs, said the Vash fund is a great way for the alumni to give back.
“They want to see the college do well and the endowment grow and they want to get students involved in this opportunity,” he said.
Ciovacco said the fund works because it's simple for alumni to give.
“If you care about the institution, as I do, it's a pretty easy thing–it doesn't hit you in the pocketbook that day. It feels good. I think it's a good idea for the college to put something like that together, because it gives them a chance to benefit from some of the students they've released into the world.”
Trachtmann calls the fund a “lightning rod for alumni that are entrepreneurial-thinking.”
Filling a gap
Not all the society members went to Union. Two members aren't alumni: Walt Robb, owner of the Albany River Rats hockey team, former GE Global Research director and an investor in a number of local companies; and Chris Myers, owner of the Parker Inn in Schenectady.
Robb said he likes where the fund fits in the Capital Region.
“The good thing about this one is that it is a very early investor, so it fills the gap that is not filled by [local venture funds] FA Tech Ventures or High Peaks,” Robb said. “It is more aimed at the early angel investor, of which we don't have enough.”
Robb hopes it encourages “young entrepreneurs who have a good idea and are willing to make the effort to take the risk to start a company that will hopefully stay here in Schenectady County.”
Myers said he has “adopted Union College as my college.”
He said investing in the fund has helped him network with Union alumni and he believes it will draw more business to his inn.
Union student Mani Ulloa, 20, who has liked finance since he was a kid, said the fund is giving him a chance to get some hands-on experience. He and three other sophomores will look over business plans and presentations sent to the fund.
“We'll be playing a fairly important role, performing research, due diligence and helping provide recommendations on investments, said Ulloa, an economics major.
“It's an exciting world out there,” he said.
Brian Selchick, a 21-year-old Union student, likes the idea that Union alumni who have made it in business will be coming back to the campus more often.
Selchick, who runs his own online auction company, Albany-based eWired Auctions, hopes the fund will help him personally.
“I think we could be a candidate for the Vash fund,” he said. “As a [future] Union alum, this a value-added [aspect] of the Vash fund: immediate access to top-notch venture-capital investors who are willing to take a serious look at your business plan.”
Ciovacco likes the entrepreneurial focus on Union's campus these days. During his time at Union in the 1980s, Ciovacco said, the focus was on getting a job at a big engineering firm. Starting companies wasn't the focus.
“The shift is a very welcome one, as far as I'm concerned,” he said. “I'd like to go there again someday. I'd rather go to the Union College of today than the college I went to and graduated from in 1987.”