Key Takeaways
- • University of Waterloo's $800-million endowment is committing up to $5 million to launch Velocity Fund II, marking the first time a Canadian post-secondary institution's endowment has established a venture capital fund to directly invest in early-stage startups.
- • Velocity Fund II is targeting a total raise of US$25 million and aims to announce its first close in Q1 2024, with the fund operating independently from both the university and its Velocity accelerator.
- • UWaterloo's $5-million commitment addresses a structural challenge inherent to the university's 100% intellectual property ownership model for student and faculty inventors—which attracts entrepreneurial talent but has historically limited the institution's ability to capture financial returns on its research ecosystem.
- • General partner Ross Robinson is leading the fund's capital raise and investor recruitment efforts, positioning the investment vehicle as a revenue diversification strategy for a Canadian research institution.
Summary
University of Waterloo has become the first post-secondary institution in Canada to invest directly from its endowment into a venture capital fund dedicated to supporting early-stage companies. The university is committing up to $5 million from its $800-million endowment to seed Velocity Fund II, a new VC vehicle spun out of Velocity, the university's in-house startup accelerator. This initiative represents a strategic pivot toward capturing financial returns on the entrepreneurial ecosystem the institution has incubated over the past 15 years.
Velocity Fund II is targeting a total capitalization of US$25 million and will focus on investing in early-stage companies, many of which have emerged from UWaterloo's Velocity accelerator. According to general partner Ross Robinson, the fund will operate as an independent entity separate from both the university and the accelerator itself. The fund is currently in the capital-raising phase, seeking institutional investors to complement the university's anchor commitment, with plans to announce a first close during the first quarter of 2024.
The fund addresses a foundational tension in UWaterloo's institutional model. The university has built its reputation on offering entrepreneurs 100% intellectual property ownership and full income rights on IP generated at the institution—a policy designed to attract world-class talent but one that has structurally limited the university's ability to generate financial returns on its research and innovation activities. Michael Ashmore, chair of the endowment's finance and investment committee, emphasized that this venture capital initiative provides a direct revenue stream on research conducted at the school, tackling a perennial challenge facing Canadian post-secondary institutions seeking diversified funding sources beyond tuition and government grants. The fund's independence ensures it operates on commercial principles while maintaining alignment with UWaterloo's entrepreneurial mission.
Velocity Fund II is targeting a total capitalization of US$25 million and will focus on investing in early-stage companies, many of which have emerged from UWaterloo's Velocity accelerator. According to general partner Ross Robinson, the fund will operate as an independent entity separate from both the university and the accelerator itself. The fund is currently in the capital-raising phase, seeking institutional investors to complement the university's anchor commitment, with plans to announce a first close during the first quarter of 2024.
The fund addresses a foundational tension in UWaterloo's institutional model. The university has built its reputation on offering entrepreneurs 100% intellectual property ownership and full income rights on IP generated at the institution—a policy designed to attract world-class talent but one that has structurally limited the university's ability to generate financial returns on its research and innovation activities. Michael Ashmore, chair of the endowment's finance and investment committee, emphasized that this venture capital initiative provides a direct revenue stream on research conducted at the school, tackling a perennial challenge facing Canadian post-secondary institutions seeking diversified funding sources beyond tuition and government grants. The fund's independence ensures it operates on commercial principles while maintaining alignment with UWaterloo's entrepreneurial mission.
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