Aiming to Spawn ‘the Next Gates or Zuckerberg,’ Harvard-Connected Venture Capital Firm Xfund Closes Latest Fund

Xfund — a venture capital firm born out of a collaboration between Harvard University, New Enterprise Associates, and Breyer Capital — closed its most recent oversubscribed fund, Xfund 3, at $120 million.

The firm is unusual in its deep, years-long partnership with the University and its School of Engineering and Applied Sciences. Since Xfund’s founding, every SEAS Dean and Harvard Innovation Labs Executive Director has served on the firm’s board. The student president of Harvard Student Agencies acts as an advisor to Xfund; in turn, the firm sits on the board of HSA.

“We just have such a deep commitment to the University, to helping the University build out its new engineering school, to helping the University promote this vision of a liberal arts education, even when studying computer science, even when studying engineering,” Patrick S. Chung ’96 said.

Co-founded in 2011 by Chung and Hugo Van Vuuren ’07, and currently co-managed by Chung and Brandon Farwell, Xfund describes its mission as combining “the raw talent, intellectual rigor, and free-thinking of academia with the hard-nosed investment acumen of venture capital.” Companies Xfund has invested in include biotechnology company 23andMe and artificial intelligence start-up Kensho.

According to Chung, this newest iteration of the fund is most notable for offering liberal arts school graduates a viable way to start a company rather than follow a default career path, boosting founders from typically non-entrepreneurial backgrounds, and continuing a robust collaboration with Harvard.

“That liberal arts graduates and liberal arts founders are actually really spectacular is, I think, the hypothesis that we set out to prove,” he said. “And, so far — again, knock on wood for the future — but so far, we’ve been able to prove.”

HSA President Akanksha Sah ’21 said one goal of Xfund 3 is to expand the firm’s commitment to diversifying venture capital investments.

“Only two percent of all venture capital dollars in the US are invested in women. But when you look at Xfund, 33 percent of the capital is invested in women. And then if you expand that to include women and immigrants it’s 52 percent. If you include women, immigrants, and minorities, it’s 72 percent,” Sah said.

Sah added that though Xfund’s demographics are significantly more diverse than national standards, the firm still has room for improvement.

“We're always looking to be better, particularly in light of the recent civil rights movements. We’re really trying to double down on our efforts,” Sah said. “That’s something that we’ll definitely be focusing on in Xfund 3.”

Harvard Beginnings

Maintaining offices in both Palo Alto, Calif. and Cambridge, Xfund aims to support unique and innovative ideas while offering a credible alternative to the more common post-graduate job routes, according to Chung.

“Harvard gets some of the best and brightest in the world. And by some measures, almost 40 percent of people who graduate flood into the arms of default careers, they go to join management consulting firms like I did, they go to manage, they go to investment banks,” Chung said. “If a huge proportion of the people who are graduating actually want to do that, then more power to them. But it’s probably not that high a number.”

Chung added that Xfund strives to ensure students have the option to build the companies they have dreamt of since childhood with the backing of a venture capital firm.

“Part of what we view as the social mission of Xfund is to ensure that everyone who graduates who has a truly creative instinct, who actually wants to create something new, create a new enterprise, that they have the opportunity to do so, that they have the opportunity to have their full social impact, intellectual impact, financial impact in the world.”

Computer Science Professor Harry R. Lewis ’68, who served as Dean of the College from 1995 to 2003 and interim Dean of SEAS in 2015, serves as Xfund’s founding faculty advisor. Lewis first became interested when Chung approached him with the idea of starting a fund with a specific connection to Harvard as an undergraduate.

Now, Lewis acts as a bridge between Xfund and Harvard, connecting Chung with students seeking to discuss ideas for new companies.

“Some of those companies that Xfund has funded, actually, were started by people I knew from a classroom setting before. So that’s, of course, been satisfying to see,” Lewis said.

In 2009, Tuan A. Ho ’09 and Nicholas B. Krasney ’09 started what would become Xfund’s first-ever investment in 2011 — internet television company Philo — in a dorm room in Dunster House, plastering the walls with aluminum foil.

Coming from a family of physicians, Ho had planned to attend medical school following graduation. But after passing by the Office of Career Services one day and hearing Chung deliver a talk on start up companies, Ho said he was inspired to delve more deeply into the idea that ultimately became Philo.

“I still remember that day because it was the thing that really set me down that path,” Ho said. “It was like after meeting Patrick and all that, that I kind of made the decision for myself that you know what, I think I'm going to seriously consider this.”

After graduating, Ho decided to defer his medical school acceptance, opting to continue working on the television streaming service idea with Krasney in the cheapest Somerville apartment they could find.

Ho credits Xfund with helping to legitimize start-ups as a valid career path following graduation and believes the firm is an important resource for any student interested in building a company from the ground up.

“In 2008, the culture was completely different, right. The idea of doing a startup was not really seen as like a legitimate career path,” Ho said, adding that Xfund “became one, I think, rather important piece of the larger entrepreneurship ecosystem that started to blossom around Harvard in the 2010s.”

Xfund 3 and Harvard Today

Sah said she believes one of Xfund’s strengths lies in its close relationship with student organizations.

“It was sort of started as a way to help make sure none of those ideas slip through the cracks or don't get the attention they deserve when they can have so much potential,” Sah said. “Having a couple of students who are on the ground on campus, meeting all of these people and hearing all of these ideas, it’s a lot easier than waiting for those ideas to actually come to you.”

As an advisor to Xfund, Sah is always on the lookout for unique ideas from students that help maintain the relationship between Xfund and students that the venture capital firm touts as mutually beneficial.

“The relationship of Xfund supporting young entrepreneurs and young entrepreneurs basically reaching out to Xfund as a resource for themselves is really a very symbiotic relationship for us because it obviously helps the VC to find successful, great ideas and it helps people to get the funding to run those successful, great ideas,” Sah said.

Chung hopes that Xfund 3 will continue to shift the risk balance of post-graduation careers, providing graduates with the support they need to pursue creative entrepreneurship. Xfund bases itself on a belief that numerous people might have been as successful as Microsoft founder Bill Gates or Facebook founder Mark Zuckerberg but lacked a safety net to pursue those endeavors upon graduation, according to Chung.

“If Xfund can take one of those people and make them the next Gates or Zuckerberg, then I think there will be, knock on wood, a lot of social contribution, intellectual contribution, financial contribution, to the University, to the world, and really to the lives of all those founders and also everyone who gets to work there,” Chung said.

—Staff writer Brie K. Buchanan can be reached at brie.buchanan@thecrimson.com.

—Staff writer Elizabeth X. Guo can be reached at elizabeth.guo@thecrimson.com. Follow her on Twitter at @elizabethxguo.