Indianapolis-based Vision Tech Angels has always invested in startups born at universities, mostly because those companies knocked on its door looking for capital.
But one of the state's largest angel investor groups now is flipping the script, scouting such investment opportunities before they come knocking.
By and large, venture investors see dozens of investment opportunities, pump money into a fraction of those, and see meaningful returns from only a sliver of those. Increasing the size or quality of "deal flow" might help improve odds, and Vision Tech Angels is looking to do so by actively exploring intellectual property born at universities and other research institutions.
"We're trying to establish relationships with the faculties or students ... behind those technologies being developed," said Oscar Moralez, managing director at Vision Tech Angels. "In doing that, it could give us opportunities to get the first bite at the apple, if you will."
Vision Tech Angels was founded in 2009 and is made up of 80 accredited investors, including attorneys, surgeons and ex-executives, in five chapters across the state.
On average, about 11 investors participate per deal with about $25,000 each, Moralez said, and the group's single largest investment was about $1.4 million.
Moralez said the group already had experience investing in technologies with university origins, including SonarMed, Corvida Medical, and FAST Biomedical. But the group decided to take a more proactive approach because a few of the group's university-linked portfolio companies have been showing solid momentum.
He declined to name the portfolio companies but said they stem from intellectual property bred at Purdue University, Indiana University, the University of Louisville and the University of Iowa.
The strategy behind the new effort includes preemptive outreach, meeting with the individuals behind emerging technologies and speaking about venture capital at some of these schools. The group isn't likely to invest in the ideas that are raw, meaning they haven't been validated or don't have an entrepreneur at the helm. But Moralez said it could help nurture them.
And it's not just universities. Moralez said he's looking to build relationships with officials at the Naval Surface Warfare Center in Crane, and the Wright-Patterson Air Force Base in Dayton, Ohio.
"All of these entities are sitting on a vast number of intellectual property assets that may have a significant place in the market," Moralez said. "I think they're just just now figuring out how to open up their assets to the general public, and at the same time we're looking for creative ways to enhance and increase our deal flow."
The process will not be easy. Serial entrepreneur J. Eric Davis, who used to work in Purdue University's technology transfer office, said startups born at universities are often attached to "a giant bureaucracy," and they have to negotiate and renegotiate licensing fees to the university.
But the benefits, Davis said, include the fact that such technologies come with deep science funded by university or government grants—technology that probably wouldn't be developed in the private sector.
"It could be solving a unique problem that maybe industry is not spending a lot of effort trying to solve, because they either view it as too complicated or too risky," Davis said.