University President Mary Sue Coleman has been in a giving mood lately. A week after outlining a $14 million plan to fund sustainability projects on campus, Coleman announced that the University will implement another initiative — direct investment in start-ups created by University faculty members. Investing in on-campus start-ups demonstrates the University’s economic and moral support for its employees, and the project should be expanded to all members of the University community.

Through an initiative called the Michigan Investment in New Technology Startups — referred to as MINTS — the University could invest up to $500,000 in any start-up formed by a faculty member. To be eligible for funding, a project must first receive funding from an independent venture capital firm. Over the next decade, the University projects that it could award up to $25 million through the initiative.

The plan perpetuates the University’s status as a leader in innovation. In the last fiscal year, University faculty filed 122 patents and 101 licenses. Faculty have also launched about 10 companies a year in the past decade.

Similar to other investments, the University will obtain a monetary return once a company becomes profitable. But unlike other investments, the University is entitled to say it is home to innovative and successful researchers, and it played an active role in helping these individuals succeed. Inventors and entrepreneurs make an important decision about their professional careers when they decide to work at the University, and this initiative indicates that work is appreciated.

Universities often invest in the most profitable ventures, many of which are not campus-grown or even in the university’s home state. Money for MINTS is coming from the University’s endowment. However, it is money that is being reallocated to help “(diversify) our assets,” according to Coleman. Though there is no guarantee all the start-ups the University invests in will generate revenue, it’s necessary the University demonstrates its support for its community.

Some universities have received large returns from profitable, campus-grown companies without directly investing in them. However, these universities tend to be located near places like California’s Silicon Valley and Boston’s Route 128, where lucrative firms invest in local start-ups. Working in a city that isn’t flourishing financially makes it more difficult for start-ups to get off the ground.

Given Ann Arbor’s geographic location and Michigan’s slow recovery from the recent economic downturn, start-ups at the University may have difficulty finding investors. It’s imperative the University lends a hand. Should these start-ups become profitable, they will likely keep and attract talent in the state, hire local workers and contribute to Michigan’s economy.

However, faculty members aren’t the only people on campus executing new and creative concepts. When the University begins to see returns on this investment, Coleman must carry out her proposal to offer funding to student start-ups as well. The University’s plan to grant funds to start-ups is a great way to encourage new ideas and local investment, and it should continue to expand this initiative.

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