University Investments in Start-Up Companies Involving Stanford Personnel

1. Background

Each year Stanford invests a small portion of its investment capital in start-up companies that are exploiting new technologies. Although many such companies do not succeed, those that do offer the potential for high returns to their investors.

2. Start-ups with Stanford Personnel Involvement

On occasion Stanford may be faced with an opportunity to invest in a start-up company in which one or more Stanford Personnel also have equity interests. The University ordinarily will not invest in such companies if any of the involved Personnel also have line management responsibilities in them, given the potential for apparent or real conflicts of interest. See Policy on Conflict of Interest and Conflict of Commitment in RPH 4.1 for guidance regarding Personnel management responsibilities in outside companies.)

However, Stanford may invest in start-ups in which the extent of its Personnel's involvement is limited to equity holdings (or rights to equity) and/or advisory roles under the following conditions:

• Stanford will not act as a lead investor or syndicating agent. All investments will be as a "passive investor."
• Stanford will not acquire an equity holding greater than 10% of the ownership of the company.
• No Stanford officer is to be a member of the board, or be an officer of the company, or have a personal equity position in the company at the time of Stanford's investment in any of the equity rounds before the company goes public.
• University investments in start-up companies in which Stanford Personnel have equity interests are subject to the case-by-case approval of the Provost, based upon recommendations by the Chief Executive Officer of the Stanford Management Company. If the involved Personnel subsequently creates University-owned data or inventions for which the start-up company seeks a license for commercial use or development, the licensing request will be subject to the review and approval of the relevant department chair and school dean, in consultation with the Vice Provost and Dean of Research.