Xfund, the investment firm based at Harvard, has closed a second fund of $100 million. While Xfund focuses on seed and Series A investments, the second fund, called Xfund 2, will be able to support companies as they grow. In addition to its Cambridge location, Xfund also recently opened a new office in Silicon Valley.
Founded in January 2012 as as partnership between the university and NEA, Breyer Capital, Accel Partners, and Polaris Partners, Xfund describes itself as an “early stage venture capital firm dedicated to investing in technically-gifted liberal arts entrepreneurs.”
As an example of a company that manages to hit that combination, Xfund co-founders Patrick Chung and Hugo Van Vuuren point to Kensho, a financial analytics startup in its portfolio.
“[Founder] Daniel Nadler earned his PhD in economics at Harvard, had a job offer to join the Federal Reserve, and had a very real problem with his academic research and work: how to run complicated statistical analyses without earning another PhD in computer science!” the two said in an email. “A lot of the advanced analyses that government, financial institutions, and academics run rely on ingesting incomplete, often unformatted data from disparate sources and require massively parallel near-real time processing of huge data sets.”
Many analysts turn to labor-intensive tools like MatLab, R, IDL, and Mathematica to code bespoke queries, but Nadler’s “broader, liberal arts mindset gave him a different perspective,” Chung and Van Vuuren say.
“He worked to create a tool that was just as powerful, but that does not require the user to write a line of code. The result: what was previously the work of quants and data scientists is now made accessible to normal people, shortening research cycles from days to minutes, and freeing millions of hours of high-priced human capital from normalizing data sets and debugging code to diving straight into asking and answering their important questions.”
Another Xfund investment is Ravel, which cuts the amount of time lawyers need to spend doing legal research. Founders Daniel Lewis and Nik Reed were graduates of Stanford’s Institute of Design and law school. Instead of accepting job offers at top legal firms, the two decided to found Ravel to help lawyers who usually rely on databases like Westlaw and Lexis-Nexis. Ravel differentiates from competing tools by putting technical questions in a broader legal context.
Founders don’t have to have graduated from Harvard to get a chance at Xfund’s resources, but the firm connects startups to its network of alumni and entrepreneurs, as well as the university’s resources.
“For example, Ravel was able to “strike a company-making deal to digitize the contents of the Harvard Law Library, which is the most comprehensive source of law in the United States,” Chung and Van Vuuren say.
Other sectors Xfund is interested in include healthcare IT (its investments include Rest Devices, the maker of smart baby monitor Mimo), online education, the Internet of Things, and next generation enterprise technology.
“We want to see startups tackle real human problems—how to cost-effectively produce measurably positive health outcomes, how to empower individuals by disseminating knowledge and skills to the most fertile minds, and how to take computing out of a machine and into the world around us,” say Chung and Van Vuuren. “Accomplishing any of these things would be incredibly valuable on every level.”