A group of Olin alumni have created an angel investing group named Parcel B, with the goal of supporting startups founded by Olin alumni. Including investments made by members prior to the group's formation and backers of our investment syndicate, we will have invested over $500,000 in at least 7 Olin startups by the end of 2017.
Everyone in the investment group has different investment goals, and each is free to make their own investing decisions. Some are focused on returns, others on building a track record for a future in professional investing, and others on simply making it easier for Olin alumni to take a risk in founding a company. All of us recognize that Olin prepares students for the most important quality in entrepreneurship - the willingness and ability to solve hard problems in the face of uncertainty. We also recognize that our ability to invest capital, including through relationships with our backers, is a direct result of the educational and financial opportunities Olin has provided us.
In the spirit of the core institutional values of the college, Parcel B is making a pledge to the Development Office of Olin College.
Most of the investments that Parcel B makes in startups are through a vehicle called a syndicate, using an investment platform called AngelList. In exchange for the opportunity to invest, AngelList members from outside the Olin community or "syndicate investors" pay part of any gains--the carried interest--to the Parcel B member who is most excited about the deal and has chosen to “lead” it. This carried interest is typically about 15% of the eventual proceeds of the investment.
With gratitude, we are pledging the entirety of the carried interest earned by Parcel B from syndicate investors to the Olin College Endowment as unrestricted funds.
Recognizing that the vast majority of technology startups examined at the seed stage eventually fail to return even the principal to the investors, and that most funds earn their returns from a small number of outliers, it would be impossible to put a dollar amount or probability on what we expect the returns of the Parcel B portfolio to be. The time frame is similarly uncertain. Accordingly, we will continue to donate to Olin as individuals. However, we believe, as I'm sure you do, that Olin alumni starting a company will be well-positioned for success, and we expect to see many successful companies founded by Olin alumni over the course of the long careers we have ahead of us. We believe this pledge may have significant value in the future. We also believe that the incalculable value Olin has provided to our professional careers and personal lives justifies sharing with the endowment any success we enjoy from this endeavor, in order to benefit future students, faculty, and staff.