The name is unchanged, but under Jack Midgley education comes first at Rose-Hulman Ventures. Business incubation is a distant second.
And speculation on high-tech startups is outside the university's core mission.
"The function of Ventures is education, because the function of Rose-Hulman is the education of engineers," said Midgley, Rose-Hulman Institute of Technology's embattled president. "Ventures is not a separate entity. It's part of the undergraduate program at Rose-Hulman, like the math department or the mechanical engineering department."
Named president last year, Midgley succeeded Samuel Hulbert, whose 28-year tenure shaped the modern Rose-Hulman. Thanks to $60 million in grants from Lilly Endowment Inc., Rose-Hulman Ventures had been the best-funded business incubator in the nation. But as IBJ reported in January, its top managers, Jim Eifert and Brij Khorana, resigned in response to Midgley's reorganization plans.
Since then, Midgley has become an increasingly unpopular figure in Terre Haute. Trustee Scott Jones, perhaps Indiana's best-known high-tech entrepreneur, resigned from Rose-Hulman's board when it refused to investigate critics' concerns about Midgley.
Complaints about Midgley's management style soon spread like fire among the school's 1,900 students and 150 faculty. Hundreds of comments were posted on the student-administered Web site www.aboutmidgley.com. On April 26, a "Hit the road, Jack!" student rally drew about 400 T-shirt-clad protesters. Then, on May 3, Rose-Hulman's faculty voted "no confidence" in Midgley 87-42.
In an interview with IBJ, Midgley painted a rosy picture of Rose-Hulman Ventures' reincarnation. Its 60 studentemployees is the highest total ever, he said. They'll be working on all sorts of projects from companies small and large.
"What drives us, and this is different from a venture capital company, is not the value of a financial investment, but the educational value to the student," Midgley said.
But before Midgley, Rose-Hulman Ventures had been among a handful of the most active seed-stage venture capital investors in Indiana. Turning a showcase business incubator into a mere classroom extension wastes precious opportunity for startups, Jones said, as well as for the students themselves.
"Indiana desperately needs resources and funding for the startup situation. Rose-Hulman was an important ingredient in that. There was much to be gained for students at the same time. It was a winwin-win, but that's not how Jack operates," Jones said.
"We need resources like the IU Med School, Rose-Hulman and the Purdue Research Park all pulling in the same direction," Jones added. "What Midgley is demonstrating here is, he has no interest in pulling in the same direction as anybody."
BioCrossroads' Indiana Future Fund was also affected by the Rose-Hulman Ventures shakeup. To land one of IFF's six investments, the incubator created a partnership with Ann Arbor, Mich.-based EDF Ventures. To date, REI Ventures has invested in two promising life sciences startups: protein diagnostician Quadraspec and security-software-maker Arxan Technologies, both based in West Lafayette.
But Rose-Hulman's role in the partnership has clearly decreased.
"From our perspective, we're working with all of the higher educational institutions in Indiana. Always have been, always will be," said EDF General Partner Mary Campbell. "The two deals we've done [so far] came out of Purdue. Does that mean we have a particular emphasis on Purdue? No, that means we'll do the best deals we can find."
That's the way the REI partnership was planned from the beginning, said Mike Arpey, managing director of CSFB's Customized Fund Investment Group.
"EDF has been, will be and is the driving force there," he said. "What we've been very pleased with, in regard to EDF, is how its on-the-ground presence has really translated into activity for the [Indiana Future] Fund, and we'd expect that effort to continue."
In the days to come, Rose-Hulman Ventures will continue to provide technical engineering and mechanical evaluation services, Midgley said. But full-scale new-business development isn't what Rose-Hulman Ventures does anymore.
"We think we have an important role to play in the Indiana Future Fund," Midgley said. "Regardless of how REI evolves."