StartX Looks To Boost Its Investment Program

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The non-profit business accelerator StartX has expanded its investment staff as it looks to place more bets into graduates of its Stanford-affiliated program.

Founded by a Stanford alum, housed minutes from the university’s Palo Alto campus, and operating a venture capital fund backed by Stanford money, StartX can be seen as the off campus accelerator for dozens of Stanford’s would-be entrepreneurs.

While StartX emphasizes that it is not officially or legally connected to the University, the college has embraced its accelerator program warmly.

The bulk of StartX’s capital for its newly-minted venture fund, which began in the fall of 2013, comes from discretionary fund within the University’s endowment. And the non-profit operates through a $1.2 million grant annually for three years which came from the University and its affiliated hospital.

To help manage the Stanford-StartX Fund, the accelerator has brought in former private equity investor Suzanne Rombeau Fletcher, who previously worked as a secondary investor at the private equity firm Paul Capital.

That fund, a passive vehicle that will automatically invest in any company graduating from StartX’s accelerator that manages to receive a $500,000 commitment from a pool of investors (with 30% coming from a professional lead investor), could amount to a significant pile of cash.

Some people familiar with the accelerator’s activities estimate that the fund could invest as much as $200 million into StartX portfolio companies (the fund is uncapped). In the 15 months since StartX launched the fund, it has invested $31.4 million in 82 companies.

The new fund is also the only way for StartX to see any financial reward for the fruits of its not-insignificant labors.

Unlike its more famous accelerator peers like 500 Startups, YCombinator and Techstars, the StartX accelerator doesn’t take any equity for the work that it does with entrepreneurs.

“Our mission isn’t to create more startups, it’s to help people build startups in a more intentional way,” says Cameron Teitelman, the 26-year-old founder behind StartX.

For Teitelman, a serial entrepreneur who had launched two businesses while at Stanford, the genesis of StartX was a recognition of the inefficiencies in the traditional venture capital model.

Rather than rely on networks of influence and insider connections, Teitelman says he wanted to provide support structures for young entrepreneurs rather than the professors and professional investors who seemed to benefit from the formalized venture capital view of the world.

Opening up the toolkit of venture capitalists to the alums of one of the nation’s elite universities situated in the humming hub of technology development globally isn’t shaking the complacent pillars of the American innovation economy, but hey, Teitelman says you have to start somewhere.

The program is producing some pretty stellar results. Since it first opened its doors in 2009, investors have committed over $700 million to StartX companies.

The fund invests across a range of industries including consumer technology, education technology, business tech, biotech, healthcare information technology, clean technology, medical devices and hardware.

Of the startups that have passed through its doors, 88% are still alive. Roughly 80% are still doing business, 9% have been acquired and 11% have had to shut down. The companies have generated $78 million in revenue, and are employing 2,035 people across the Bay Area and beyond.