Fund Bolsters University Ideas
Adam Winnick, the 25-year-old son of one of the richest men in Los Angeles, has just raised $29 million in venture capital for his own investment firm--and it wasn’t all from his dad.
The firm, ITU Ventures, a Beverly Hills-based fund targeting university entrepreneurs, received money from a list of well-respected venture investors, including Softbank Inc., the principals of Apollo Management, and funds managed by Trust Co. of the West in Los Angeles.
About $5 million came from Pacific Capital Group, the Beverly Hills merchant bank run by Winnick’s father, Gary Winnick, who had a net worth exceeding $6 billion last year thanks to the rise of his telecommunications firm, Global Crossing.
“We’re young, but we have access to capital,” said Winnick, who is co-founder of ITU. “We hope we can get people to see through our youth.”
ITU’s ability to raise a significant sum from investors in an increasingly tough climate for venture capital signals a validation of the firm’s mission, Winnick believes. That mission is to invest in technology ideas emerging from top graduate schools.
“We understand the campus environment better than anyone and we’re going to see these deals first,” said Winnick, who comes across as confident but also earnest. “We want to educate the universities about entrepreneurship and get to professors and students who are thinking about making the jump to entrepreneurship.”
ITU’s strategy is to use a network of graduate students and faculty members to find promising new tech ideas. The fund then works with professors and students by providing seed investments ranging from $100,000 to $1 million. ITU also provides accounting and other support.
Ron Fisher, vice chairman of Softbank, said he viewed ITU’s “singular focus on universities” as a key attraction.
Traditional venture capitalists have found that scouring campuses for potential deals is too time consuming, Winnick said.
He sees ITU’s model as the logical bridge between other venturists and university entrepreneurs. Founded last year, ITU now has networking relationships at Caltech, Carnegie Mellon, Columbia, Georgia Tech, Harvard, MIT, Purdue, Stanford, UC Berkeley, University of Michigan, University of Pennsylvania and University of Texas, Winnick said.
The firm has funded six ventures since March. They include a $100,000 investment in OEwaves, an optical and wireless firm founded on Caltech’s Pasadena campus.
“To be honest, I wasn’t going to work with them at first, but they were so persistent and so professional,” said Julie Schoenfeld, who was tapped by ITU to be chief executive of OEwaves. “They are aggressive, hard-working and hungry. And they have access to enormous connections through Adam’s dad.”
Winnick and his ITU partner, 27-year-old Chad Brownstein, have known each other since Winnick was 10. Both worked on Wall Street before making the jump to ITU full time. Jonah Schnel, 27, is the third ITU managing partner. Winnick acknowledged that ITU faces some major hurdles. One of the biggest: universities’ intellectual-property rules, which can make it difficult for entrepreneurs to go out on their own.
But Winnick also believes that schools increasingly see the benefits of fostering successful companies--including the long-term endowments and enhanced image they can bring.
Despite competition on university campuses, Winnick said ITU is already on its way to building a strong brand. He admitted that his family name doesn’t hurt, but he added: “We’re building a reputation here.”
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In other business-financing news, the U.S. Small Business Administration said last week that it will expand its program to provide government-backed loans for independent filmmakers and production companies. On Thursday, the SBA announced it had signed partnership agreements with two trade groups--Los Angeles Women in Film and the Independent Feature Film Producers.
The new program was announced earlier this year with a loan by the SBA’s Los Angeles office to Mychal Wilson and Eugene “Geno” Taylor, producers of “Gristle,” a comedy film that aims to challenge racial stereotypes. The program, which establishes intellectual property as eligible collateral to secure SBA loans, also has applications for other businesses involved in intellectual property, such as software and other tech companies.
Under the expanded plan, the SBA will guarantee up to 70%, or $750,000, of bank loans to existing companies as well as to start-ups that meet certain criteria.
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Times staff writer Debora Vrana can be reached at debora.vrana@latimes.com.
