Created by Founder and CEO of Control Data Corp., William C. Norris, the William C. Norris Institute is a seed stage capital fund serving “innovative technology-based companies that are in the early stages of commercializing proprietary products and services.”
Since 2001, the Institute has been affiliated with the University of St. Thomas, Opus College of Business (although the fund is not exclusively reserved for UST students and alumni). Unlike most investment funds, the primary is objective is education, rather than return on investment.
My interview with Mike Moore, Director of The William C. Norris Institute, follows:
Zach Robins (“ZR”): How is the Institute structured?
Mike Moore (“MM”): Our primary objective is education. We involve business students in order to teach them about investing. It is an evergreen fund (no time restrictions) of $3,000,000 and draws down $250,000 per year to invest. All returns are reinvested and as a nonprofit, future funding relies upon donations.
ZR: How does an entrepreneur apply?
MM: The process starts with an executive summary and then we work with MBA students on screening the companies. Students typically pick one investment per semester to conduct due diligence. If they decide they like it, we negotiate the terms. We then make a formal recommendation to the CFO and Dean of the Opus College for approval.
ZR: What type of investment terms can be expected?
MM: It is tough when dealing with pre-revenue companies. Most entrepreneurs want valuations set by projections, but I disagree, at least up until the company has customers. I do my own valuations which range from $1-3mm range, unless I am dealing with a successful entrepreneur. As for the investment amount, $250,000 invested per year will yield about 4-5 investments ranging from $25,000-75,000. This equates to 2-2.5% fund ownership.
ZR: What happens post-investment?
MM: Ideally the company can use our funds to pay for patents or commercialization. I often work with our companies in an advisory role. Additionally, sometimes students serve internships, and in one case, a student was hired after graduation.
ZR: What sectors do your investments fall into?
MM: Since 2001, 36 investments have been made totaling $2.4MM. 18 in IT (software or web services), 6 clean-tech, 5 health-related, 2 consumer services, 2 security, 1 consumer product, and 2 investments in others funds. Currently, there are 26 active companies in our portfolio.
ZR: Has the fund been successful?
MM: Of these 36 investments, five companies have had positive exits, yielding $675,000. Constant Data was a real-time data mirroring company that serviced large customers like NASA, DOJ, and backed-up AOL. This company was eventually sold to Backbone Software. We also invested in CDM Data, which manufactured a wearable computer for managing auto inventory. This company was sold to Kelly Blue Book in 2005.
For further information or to submit a business plan executive summary for potential investment review, please contact:
Mike Moore, Director