Colleges Woo Tech Millionaires-in-Waiting

Schools cultivate ties with startups before they’re big successes | “People aren’t just going to give you a mega gift right off the bat”

Claire Suddath

Jason Kapalka PopCap Games CEO


Jason Kapalka didn’t give his alma mater much thought after he finished his studies in 1994. The University of Alberta graduate, who has a bachelor’s and a master’s degree in English, moved to San Francisco and didn’t join the alumni association, donate money, or return for reunions. “If I’d stayed in Edmonton, I probably would have,” he says. The university didn’t forget him, though.

Kapalka went on to co-found PopCap Games, where he helped create such addictive games as Bejeweled, Bookworm, and Plants vs. Zombies that collectively have been downloaded more than 1.5 billion times. Electronic Arts bought the company last year for $750 million. Now the newly rich Kapalka is in talks with his old school about setting up a $100,000 endowment.

As Kapalka’s career started to take off, the university cultivated a relationship with him — inviting him back to campus, honoring him with a special award, and putting him in touch with one of his former professors. “They didn’t ask me for anything,” he says. “It was me who wanted to give to them. Although being in touch with them again definitely made it easier.”

Competition for alumni donations, always intense, has heated up in recent years: Alumni donations rose 10 percent in 20110, to $7.8 billion. Data compiled by the Council for Aid to Education show that one quarter of U.S. colleges netted 86 percent of all donations. The top five fundraisers in 2011 were Stanford, Harvard, Yale, Massachusetts Institute of Technology, and Columbia.

In February, Stanford announced that its five-year drive raised $6.2 billion. The total, which includes donations from organizations and corporations, was 44 percent above the school’s original $4.3 billion goal. Stanford enjoys a big edge, given all the Silicon Valley entrepreneurs it counts as alumni. The founders of Instagram, Yahoo!, and Linked In are all Stanford grads, as are roughly 5 percent of Google’s employees.

“The alumni list is a huge advantage, obviously,” says Don Fellows, chief executive officer of Marts & Lundy, a philanthropic consulting firm. Not all schools know how to put it to use, though. “I have one client, a school, who didn’t even realize that a famous individual was one of their alumni” until he did a big deal, Fellows says.

“Young entrepreneurs look at philanthropy differently than older donors,” says Michael Simmons, CEO of Empact, which helps universities and other organizations connect with entrepreneurs. “They want to make a difference now, not just decades from now. Schools are going to have to learn to tap into that.”

Babson College, a business school in Wellesley, Mass., found it had a significant number of young alumni who wanted to donate, but “all of their current cash was being put into their new ventures,” writes Wendy Silverman, Babson’s director of corporate, foundation, and government relations, in an e-mail. So it started the Founder’s Fund, in which alumni pledge a portion of their startup’s future earnings. So far 47 people have signed up, and Babson has collected 17 donations totaling close to $3.4 million.

Occasionally universities find future donors through happenstance. Before Joe Essenfeld, a 2001 Cornell University alum, founded the New York-based software company JIBE, he was chief operating officer for Insomniac Cookies, a late-night cookie delivery service. “When we were looking to expand the company, the first campus I wanted to open a location at was Cornell,” says Essenfeld, who soon became acquainted with university officials. Last year, Essenfeld joined the Cornell Entrepreneur Network, a business networking program for alumni, students, and staff, and helped the university prepare its bid to build an applied science campus in New York City. Essenfeld, who says he makes regular contributions, hopes he can be more generous one day: “If they catch me at the right time in the future, and I have the means to give a meaningful donation, I would do it.”

Joe Gebbia, co-founder and chief product officer of online vacation rental marketplace Airbnb, is a Rhode Island School of Design (RISD) alum who never cut the cord. The 2005 grad has served on alumni boards, helped recruit applicants, and returned to campus to speak to students. Airbnb was valued at over $1 billion in 2011, but with the company yet to go public, Gebbia is a millionaire in name only. “I donate some money [to RISD] off and on,” he says. Nonetheless, the school recently named him to its board of trustees. Gebbia still wears his class ring and it’s a good bet he’ll remember his alma mater if he strikes it rich. Says Gebbia: “It reminds me of what I went through and who I owe credit to for where I am today.”

The bottom line More universities are investing time and care in building relationships with startup founders in the hopes of turning them into donors.


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