A lot of professors as they get on in years (and amass some retirement funds) qualify as accredited investors, and teaching entrepreneurship we see a lot of prospects. I've invested in several businesses. So far no returns, but all have gone on to raise serious funding in the real world so I remain hopeful. It is a bragging point for the lucky students because saying "my prof invested" gives a lot of other early investors confidence (after all, we're known as a group for being careful with our money).
Someone who has thought about this a lot is my friend Kelly Shaver, who will be presenting on the topic in Seattle at the ENT Division's Late-Career Workshop, Friday, August 5, 2-3:30 pm. His session is: Becoming an angel investor: Many late-career academics have amassed 401K retirement portfolios well above the $1M minimum required to be an "accredited investor." Plus, the analytical and managerial skills possessed by many management scholars transfer very well to the angel investment industry. (BTW, despite the "Late-Career" label, everyone is welcome at the Late-Career Consortium).
Jerome A. Katz | Robert H. Brockhaus Chair of Entrepreneurship | Richard A. Chaifetz School of Business, Saint Louis University, 314-302-0641 (cell/text) | email@example.com, http://www.slu.edu/eweb
Kyle, great points. For what it's worth, I would never consider investing while the students are in my class (which is at the end of the major and usually the student's academic career). I was trained as a psychologist and that sort of dual relationship would be anathema. Likewise I never ask the student (because of the power differential), but will respond with my personal take to any student if they ask me. Our grading rubric (https://sites.google.com/a/slu.edu/eweb/class-resources/judging-forms) actually has an "A" grade as a plan being "investment-ready" so students, so most students know when they are positioned to ask for funding.
Your second point is valid. It has come up and the student who told me about this handled it by saying "I got a B for my plan in Katz's class, but I reworked the plan based on their feedback and I want to get some other investors before I got back to him with the revised and invested plan." I think the student will go far in real life! I retell the story at the end of the semester when talking about next steps.
Your question has generated all sorts of great responses. Thank you and all our fellow responders!
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Important question indeed. I never felt an obligation to invest in my students' start-ups, I always pushed them to invest their own money, even very small amounts, to start their businesses. At least in Europe, students often think that they can create start-ups without investing anything from their pocket. I try to encourage them to find their own way to investors, and now I have at least a couple if very good success stories. Different situation about PhDs or young researchers, in that case I see also many colleagues more favourable to be involved and to invest.
With my research group, we are making an extensive analysis around European universities on the various mode of students' entrepreneurship with this program https://eit-hei.eu/
If you are interested, I would like to keep in touch.
Kyle, hi.Lots of great discussions here, I'm now curious if other institutions in the US or elsewhere have specific COIs that address this issue. Per my discussion of the questions with Jonas and another colleague, here are some answers:What is the rationale for this prohibition on investing in student ventures? I believe the rationale is to prevent any Brown- community member (which means faculty and staff) from benefiting in an unfair manner from a particular relationship with a student(s). It also can lead to potential ethical lapses and the creation of inequities around opportunity for certain students over others.* What presaged the addition of this component of the COI policy? Some of this was in response to queries from colleagues to university COI/leadership around these issues as entrepreneurship activities grew on campus.* How would that policy apply to the following situations? A) Faculty is part-time practitioner. B) Student is in the faculty's dept but not class. C) Student is not in department or class. D) Faculty invests one day/month/year after graduation. E) Faculty is a co-founder with a student, together in a STEM department (i.e. classic tech transfer venture). A, B and C should be avoided as our policy covers all Brown-community members regardless of status (A) and the student could eventually end up taking your class, working with you on other projects, become a mentee, etc. (B and C). D is fine. E happens often as this relationship is different than investor/investee.In general, we try to be quite broad in how we think about our relationship as educators, administrators/staff with students in order to support them, which means that we interpret most of our engagement as falling under the purview of the COI policy.best,
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