Contrary Capital, a university-focused venture capital fund founded by entrepreneur Eric Tarczynski, launched today at noon. The fund provides financial backing to startups founded by students, faculty, and graduates of top universities, including the University.
Tarczynski said he started the fund because of the exponential proliferation of entrepreneurs at U.S. universities. At the same time, he observed a gap between the few thousands of dollars of startup funding given by universities and the millions of dollars startups actually needed in early-stage funding.
“We’re basically investing in the brightest university entrepreneurs,” Tarczynski said. “Students, faculty, and recent graduates at the top schools across the U.S.”
The “decentralized” fund features an investment team of over 100 students at universities across the country who will identify potential startups for Contrary to invest in and back. Eighty percent of Contrary’s “limited partners,” or investors, are top tech entrepreneurs affiliated with industry giants like Tesla or Twitch.
"As an investor for Contrary, my aim is to not just give strategic advice, make introductions, and allocate capital," said Rohan Doshi '18, Contrary's team member at the University. "I also get in the trenches with the founders I work with. For example, I've often received 3 AM calls to review pitch decks. And, I've had to help founders source talent within niche specialties at different schools using Contrary's national network."
According to Tarczynski, although the majority of Contrary’s backers are tech investors, the fund is open to investing in startups in any industry. However, many of the startups in which Contrary aims to invest are information technology or software companies.
“Officially, we’re industry agnostic, but we’re very strongly focused on IT, primarily software and hardware companies, although we will look at anything,” Tarczynski noted. “Maybe there’s a consumer goods company, all those things are fair game.”
Tarczynski explained that after the team identifies an investment opportunity and decides to back it, Contrary typically purchases up to a 10 percent equity ownership stake. According to Tarczynski, Contrary helps accelerate its portfolio companies in a few core ways, one being personal mentorship from the investors’ experience in entrepreneurship.
“I’ve spent the past six or seven years living and breathing university entrepreneurship on a personal level, building businesses,” Tarczynski said, “and now spending the past couple years meeting with hundreds, if not thousands of entrepreneurs across the U.S. I think we have a better understanding than most of what it takes to build a business at the university level.”
Contrary also has a competitive advantage in that it’s part of a multi-layered network of entrepreneurs, investors, and business leaders across the world. The fund is connected to a university network of over fifty schools, as well as many investors and venture funds concentrated in Silicon Valley.
“We view Contrary as bringing a little bit of the Silicon Valley firepower to all these other places across the U.S.," Tarczynski added. "If you’re looking for a connection at a top-tier venture fund, we can do that pretty easily."
Contrary also features a summer program in entrepreneurship for the founders and managers of their portfolio companies where they bring the CEOs in their portfolio to the San Francisco Bay Area and work with them to accelerate their companies.
When asked what he felt the biggest challenge young entrepreneurs have to overcome was, Tarczynski answered “commitment.” It’s a difficult feat to start and grow a businesses, and this issue also lends itself to challenges on Contrary’s end, as they have to be absolutely sure of an entrepreneur’s commitment to the company before they can invest in it.
Tarczynski offered several pieces of advice to university-based entrepreneurs. He noted that many entrepreneurs seek validation through funding instead of consumer response to their products. Tarczynski encouraged entrepreneurs to focus on perfecting their goods and bringing them to market first, and seek funding second.
Contrary has purchased stakes in two companies so far: Additive Rocket Corporation, a University of California, San Diego-based startup that manufactures low-cost rocket engines for space companies; and Cortex Health, a Brigham Young University-based startup with a healthcare follow-up platform called CheckUp.