VC fund taps students to find best on-campus investments

UC San Diego’s start-up Additive Rocket Corp on Contrary Capital’s list

As an undergraduate at the University of California at San Diego, Martin Arreola immersed himself in the startup scene on campus — organising a hackathon for student entrepreneurs and keeping tabs on fledgling companies springing up in research labs and dorm rooms.

The experience led Arreola to be recruited to join a new early stage venture capital fund that taps university students throughout the country to find the best on-campus entrepreneurs for potential seed funding.

Contrary Capital, officially launched last month, is the brainchild of Eric Tarczynski, a 25-year old New Jersey native who spent two years travelling the country to put together a team of about 100 students at 50 campuses. Students receive a tiny equity stake in the companies backed by Contrary Capital — which counts as investors the founders of Tesla, SoFi, MuleSoft and Twitch, among others.

Contrary Capital’s first two investments include UC San Diego start-up Additive Rocket Corp. Founded in 2015 by recent graduates Andy Kieatiwong and Kyle Adriany, Additive Rocket has developed technology to design and manufacture rocket engines using 3D printers.

“We have consistently been able to reduce the weight by at least 50 per cent, and that is everything in aerospace,” said Adriany. “Our big value add is we are able to design and manufacturer them so rapidly with 3-D printing that we can make each one custom to the exact mission.”

Tarczynski declined to say how big a bet Contrary Capital made on Additive Rocket, or how much the new fund has raised overall.

But Forbes reported that Contrary Capital’s first fund is expected to be in the $5 million to $7 million (Dh18.5 million to Dh25.6 million) range.

Contrary Capital looks to invest $50,000 to $200,000 to help start-ups bridge a “huge gap” between what’s available from their universities’ entrepreneurial programmes and the seed capital needed to move beyond the prototype-minimal viable product stage.

“Usually you’re able to get $5,000 to $15,000 in non-dilutive funding from business planning competitions or your school’s entrepreneurial ventures,” said Tarczynski. “But it’s that next step to a true seed or small Series A round where the gap exists.”

Contrary Capital typically takes a 2.5 per cent to 10 per cent ownership stake, depending on the amount invested, said Tarczynski.

Contrary Capital isn’t alone in targeting campus start-ups. Several venture funds nationwide focus on universities. At UC San Diego, they include the Triton Technology Fund and Osage Partners, which provide early stage seed funding to start-ups.

With nine accelerators and incubators on campus nurturing young firms, there’s plenty of demand for additional capital, said Briana Weisinger, a start-up advocate with UC San Diego’s Office of Innovation and Commercialisation.

Arreola is no longer part of Contrary’s team at UC San Diego, but he hopes to join the group at his future graduate school, which he hasn’t selected yet.

Arreola’s goal is to found a life science company. “That has been my dream,” he said. “I have always been entrepreneurial ... I joined Contrary — to get an inside look at other founders and how the venture capital world works.”

Cofounder of Additive Rocket