Forget the gala, these Silicon Valley schools run their own venture capital funds

In the Silicon Valley area, a new trend is emerging in private schools—building mini venture capital funds. Crystal Springs Uplands School, a 569-student institution on the peninsula between San Francisco and Silicon Valley, is among the growing number of private schools adopting this approach. While the school still plans to host a gala, it is not the primary source of fundraising.

Instead, the funds are coming from donations from the school community, guided and overseen by parent-investors from well-connected firms like Lightspeed, Notable Capital, and Sequoia. The idea originated at Saint Francis High School in Mountain View, where a $15,000 investment in Snap yielded $34 million when the company went public in 2017.

Now, a few schools are sitting on private portfolios valued at millions. As the era of massive tech companies staying private indefinitely appears to be ending, with SpaceX's recent IPO and expected public debuts for Anthropic and OpenAI, these schools are betting that their pre-IPO stakes could generate significant returns. The mechanics of these funds are straightforward, but the access and expertise required to make them work are more complex.

A pool of capital is set aside, donated by parents or alumni, and a committee of volunteer investors vets potential investments. The schools have an advantage over typical funds because they don't have management fees or take a share of the profits, and they don't pay capital gains tax on returns, making their net returns potentially higher.

Menlo School and Menlo Venture Capital Endowment are other examples of this model, with an investment oversight board made up of school leaders and trustees from established venture capital firms.