Some of the next unicorns will be Tar Heels. At least, that’s a goal for UNC’s student-run VC fund Lux Libertas Ventures.
Student-run VC funds are not the norm, but the UNC student founders of Lux Libertas Ventures set out to do something novel.
Managing Partner Sanjeev Musuvathy and his Co-Founders Nathan Ho (VP of Platform), Temoor Dard (Co-VP of Investment), Kaustubh Tiwari (Co-VP of Investment) and Ananya Mallik (VP of Growth) all have some background in venture finance or startups.
Musuvathy has been involved in the entrepreneurship world since high school, when he met founders of unicorns across the world like Ironclad, which makes enterprise software for managing contracts. He even was a founding venture capital investor at Boston-based Odds On VC, where he invested in Viv for your V, an eco-friendly period care company.
But after talking to some friends last summer, Musuvathy and the others realized that a lot of the opportunities and mentorship in VC just weren’t available at UNC. So they wanted to fix that.
“We’re trying to equalize the playing field and democratize venture capital through a student-run venture capital fund,” Musuvathy said.
Currently, Musuvathy said Lux Libertas is in the fundraising process with a few potential investments on the horizon.
They will invest pre-seed checks between $25,000 and $50,000. The goal is to have a $2.5 million fund by August 2021.
Part of the appeal for a Gen Z-run venture capital fund is that the founders can apply their knowledge to markets that serve their generation.
Musuvathy said Lux Libertas Ventures’ thesis is that Gen Z is fundamentally disrupting the way businesses are operating. As part of the generation that is thought to be the most entrepreneurial in history, Musuvathy said they are unique as digital natives who have used technology since they were babies. This creates a generation that is distinct in how they consume and interact with products.
Many companies are attacking core problems that Gen Z faces, like mental healthcare or banking in the financial tech space, Musuvathy said. And these are the ones Lux Libertas Ventures hopes to invest in.
“What we do is, as Gen Z investors ourselves, we invest in anything that attacks those problems and things that we believe we have domain expertise over,” Musuvathy said.
Duke, UNC and NC State are a powerful combination of universities in the Triangle, but most startups forged from students and alumni do not secure investments or funding until later rounds with higher amounts. Lux Libertas Ventures has access to these founders and can connect them to partner institutions including angel networks, Musuvathy said.
First Student-run VC in NC
Lux Libertas Ventures will be the first student-run venture capital fund in North Carolina, which allows them to be a thought leader in the space of Gen-Z capital, he said. (“Lux Libertas” means “Light and Liberty” in Latin and is part of UNC’s official seal.)
Student-run VC funds are not common even in mature tech ecosystems like the Triangle, and Musuvathy believes investors systematically under-invest in markets they do not interact with, leaving a huge amount of companies serving younger generations out in the cold.
While there’s beginning to be an ongoing trend of student-run VCs nationally, Musuvathy knows many are concerned that these funds are run by “kids.” But Musuvathy said they’ve created systems to maximize opportunity and minimize turnover as students graduate.
Lux Libertas Ventures will be an opportunity for all the students who are unable to get into the UNC Kenan-Flagler Business School course that introduces students to VCs, an industry that is already difficult to gain knowledge about, Musuvathy said. Lux Libertas Ventures has made an open-source curriculum for UNC students to learn about VC.
For many student founders, there’s an income gap, leaving a tremendous challenge for investments, Musuvathy said.
“Even after you build a product and gain your initial traction, because there’s not an early-stage, first-check investor, a lot of startups fizzle out,” Musuvathy said, adding that it didn’t seem like a feasible career path for most UNC students before Lux Libertas Venture.
Lux Libertas will make being a startup founder a more viable path at UNC with co-investors in New York City and San Francisco including Bowery Capital, he said.
When Musuvathy thinks about the future of Lux Libertas Ventures, he is focused on closing the fund round of $2.5 million and starting investments. Lux Libertas Ventures also wants to continue events where they bring in VC education grounded in diversity, with women and racial minorities in VC.
“When we teach venture we want to make sure that venture really is representative of all opportunities and all options,” Musuvathy said “because currently in venture capital only (around) 1% of funding goes to women and people of color.”