Ohio State recently invested tens of millions of dollars into a venture capital firm, though many details of the deal remain unclear.
OSU invested roughly $50 million into Drive Capital, which was launched by Mark Kvamme earlier this year, according to reports by The Cleveland Plain Dealer.
Venture capital firms invest money into eary-stage startup companies. These type of investments are typically seen as high-risk, high-reward.
Questions related to the investment, including where the funds for the investment came from and what oversights were put in place, remain unanswered by university officials.
OSU’s Office of Business and Finance referred The Lantern to assistant vice president for media and public relations Gayle Saunders.
The Lantern filed a public records request for the contract between OSU and Drive Capital Thursday.
Saunders said Monday the public records request is being processed, however, she declined any additional comments or questions related to the investment.
Some OSU students were unconcerned with the university’s lack of transparency surrounding the investment though.
Emily Swingle, a fourth-year in biomedical engineering, said she trusts university officials to make good investments.
“There are people in charge of the university and they’re in charge for a reason,” she said.
Others, though, were concerned with where the money for the investment came from.
“If we’re paying for it (with tuition money), then it’s silly,” said Tori Smith, a second-year in nursing.
Elizabeth Krill, a fourth-year in materials science and engineering, agreed.
“They charge us a bunch of (tuition) money, and then they have to get rid of it somehow,” Krill said. “At least it was an investment,” and has the opportunity to pay off, she added.
Drive Capital was co-founded by Kvamme and Chris Olsen. Both were previously partners at Sequoia Capital, a venture capital firm based in California that has backed companies such as Apple, Instagram and Google. Olsen is also a native of Cincinnati.
Jenny King, a second-year in speech and hearing science, said Kvamme’s tenured background in venture capital is comforting.
King said Kvamme appears to be “reliable” because of his previous investments with applications like Instagram, adding that a lack of transparency with the investment didn’t bother her.
According to its website, Drive Capital “invests in innovative technology, health care and consumer companies in the Midwest.”
Representatives from Drive Capital did not immediately respond to request for comment from The Lantern via email Monday.
Kvamme acknowledged that an agreement exists between OSU and Drive Capital in an email to The Plain Dealer.
“We believe in the opportunity in Ohio and the Midwest to create world-changing technology companies. It is important that people here understand our goals and objectives for the region,” he said in the email.
The company has so far invested in Roadtrippers, a Web-based road trip planning platform, and CrossChx, a company specializing in preventing medical identity fraud.
Some students said it was smart for OSU to invest in Drive Capital, a firm that invests money into small businesses.
“It’s good to see they’re interested in small business,” said Matt Esterkamp, a second-year in business. “That’s where a lot of jobs come from, small business.”
OSU President Emeritus E. Gordon Gee said he feels the investment was an important one in a statement to The Lantern about the investment Thursday, sent via Jason Shough, an OSU senior policy analyst who works with Gee.
“I am so glad that the priority on investing in education, research and job creation that I championed as president has continued. The current administration’s support for innovation, as evidenced by its decision to invest in Drive Capital — which I enthusiastically supported — enhances creative opportunities for students, faculty and staff,” the statement read. “It is my hope that such approaches can become a model for other higher education institutions to follow.”
Gee knew Kvamme before working with him on the investment.
At one point, Kvamme headed JobsOhio, a private state development agency that has been a key initiative for Gov. John Kasich. Gee is a board member of that agency.
OSU invested in the firm shortly after Gee announced he was retiring from his role as university president June 4, The Plain Dealer reported.
Gee’s announcement came days after controversial remarks he made at a Dec. 5 OSU Athletic Conference meeting came under public scrutiny. Comments, which he later called “inappropriate,” about Notre Dame and the Southeastern Conference in particular brought national attention.
The investment also followed a provision approved by OSU’s Board of Trustees at an Aug. 30 meeting that brought together OSU’s two investment portfolios: a long-term investment pool and the university’s operating funds.
The provision also allows the president, provost and senior vice president for Business and Finance in consultation with the Chair of the Finance Committee and the Board of Trustees to invest up to $100 million in funds at their discretion, “but in the best interests of the university,” according to minutes from the meeting.
Interim President Joseph Alutto, Executive Vice President and Provost Joseph Steinmetz and Chief Financial Officer and Senior Vice President for Business and Finance Geoff Chatas currently hold these positions, respectively.
At the end of the 2013 fiscal year, the university’s long-term investment pool totaled more than $3.1 billion, and its operating funds were at nearly $2.9 billion, according to Board minutes.