8 Shared Interests of College Presidents and Venture Capitalists

Posted September 01, 2015 by Richard A. Moran - President - Menlo College

Venture capitalists and college presidents: these two professions seemingly have nothing in common. VCs want to revolutionize colleges right away, adopting the latest technology, radical new courses, and cutting-edge apps. College presidents wish to honor the traditional four-year model and move at a more incremental pace. But these two positions might be more similar than expected.

When VCs and college presidents work together, good things happen. Take the emergence of MOOCs (Massive Open Online Courses). The concept began with academics and was quickly embraced and expanded on by venture capitalists, resulting in new companies and free online courses offered around the world.

This innovation reached many students outside of the traditional classroom, and more professors are adopting the MOOC format in their on-campus lectures by dividing them into shorter segments, giving more frequent assessments and providing more opportunities for problem-solving activities. MOOCs are one way college presidents and VCs work together to shape the future of higher education. Tradition met technology, and everyone benefited.

Another example is that universities are introducing affiliated venture funds for their own faculty and students. These joint ventures include Stanford University and StartX, the University of California and UC Ventures, and MIT and the E14 Fund. Stanford now has its nonprofit business incubator working to develop entrepreneurs through experiential education. UC entrepreneurs can now compete for funding provided directly by their college. Seven MIT Media Lab-founded startups now receive stipends, mentoring, introductions to investors, and basic legal and accounting services.

VCs and college presidents share the same major responsibility: the next generation. VCs build the companies of the future, while college presidents shape the leaders of the future. As someone with experience in both roles, I can see even more substantive ways in which VCs and college presidents share similar perspectives.

1. Forecasting

Both presidents and VCs must envision the future. The VC views it through entrepreneurs and technologies. The college president sees opportunities through the students and institutional research. Both must rely on pattern recognition in considering possibilities. Does the entrepreneur show something that signals future success? Did the basketball coach have an overall winning record before? When making decisions about the future, the data are often incomplete. To create an ideal future, both leaders must rely on instincts and judgment, sometimes going against the grain.

2. Idea Generation

Both positions require ideas, ideas, and more ideas. It’s better to consider 10 ideas in the hopes that one is worth the investment, whether it is a new technology or a new academic program. When the deal flow or the demands on a college budget dry up, it’s a warning sign that ideas aren’t flowing at the rate they should be. Similar to entrepreneurs and their startups, no idea is a bad one.

3. Risk Taking

Both VCs and college presidents will make decisions that seem to outsiders not to make sense. A VC may make the decision to invest in cold fusion, a technology that has never been proven. A college president may decide to build a new sports center in the midst of budget cuts. Only time will tell if these decisions pay off. This is another instance in which VCs and college presidents have to channel their inner entrepreneurial spirit to make the right decision at the right time.

4. Fund Seeking & Limited Resources

The well of money always needs to be refreshed in the venture world and in higher education. Effective leaders in both spheres are always raising money and must rely on funding sources. Further, each leader has limited resources to spread around. Even the big venture funds are not limitless; monies must be set aside for future investments. And simply put, no college president has enough money to keep everyone happy … ever. At a time when big funds are being created and tuition is high, both need to refute the perception of having unlimited resources at hand.

5. Investment Monitoring & Oversight

Both professionals must be smart with said money. Investment considerations can run from autism analysis to video games. Academic decisions might range from athletics to zoology. Renaissance and entrepreneurial thinkers are required for this type of decision making. The model is not to spend money, sit back, and hope it works; rather, it is to allocate resources and then make sure something good comes out the other end. The “end” may be five or 10 years in the future, and the need to follow an investment never ends.

6. ROI & Metrics

The capital required to be successful in both roles is immense. On top of that, it’s imperative that both show some type of return on the investment. An ROI needs to be shown for any fund or college to survive. VCs and college presidents pay heavy attention to this metric. A lack of an ROI could be a career-shortening event for either. Also, both can benefit disproportionately from a big win. Win an NCAA title, and the entire institution will benefit in fundraising, enrollment, and branding. See Duke and Gonzaga, for example. Make a tremendous investment, and suddenly you have the Midas touch, and the fund’s reputation is set for ever. See Google and Sequoia Capital.

7. Team Creation

College presidents and VCs must both rely on the success of teams. Any VC will report that the entrepreneurial team is more important than the technology. Likewise, any college president will say that without a great team, success is elusive. Creating teams is the most critical part of each and every job these two professionals carry out.

8. Constituent Pleasing

Both executives have many constituents to please. For the VC, the list includes investors, partners, entrepreneurs, and the entire tech world. For presidents, the list includes alumni, faculty, students, family, and the local residents, among others. Planning a brighter future and keeping constituents happy can sometimes be tricky, yet it’s something every VC and college president must accomplish to continue moving forward.

Good leadership requires so many special traits. Key among them is a unique blend of judgment, risk taking, and keeping lots of people happy. VCs and college presidents share these unique traits, allowing both groups to make the future a little better … sometimes even together.

Richard Moran is the president of Menlo College, located in the heart of Silicon Valley. He is a former partner at Venrock, was a tech company CEO, and has written seven books on the world of work.