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Last updateTue, 28 Mar 2017 5pm

Business & Real Estate

Snapchat IPO is a boon to St. Francis

It is well known that local schools follow the fortunes of Silicon Valley, but St. Francis High proved a unique example last week.

An alumnus who suggested that the school’s Growth Fund make an early investment in Snapchat is now the recipient of his alma mater’s “profound appreciation” after the messaging app’s parent company debuted its initial public offering Thursday.

The St. Francis Growth Fund invested $15,000 in Snap, Snapchat’s parent company, in May 2012 at the suggestion of Barry Eggers, a venture capitalist and St. Francis graduate. Eggers said he learned of Snapchat after hearing his children talk up the app. His children later graduated from St. Francis. Eggers’ firm, Lightspeed Venture Partners, invested an additional $485,000 to round out the startup’s seed funding.

According to Simon Chiu, president of St. Francis, the school owned 2.1 million shares at the time of the IPO. It sold two-thirds last week for $23 million, holding on to the final third of its initial shares.

Investing in long-term growth

Chiu called Thursday “an amazing day, a really transformational day.”

“We are excited for the work ahead of us,” he told the Town Crier.

Kevin Makley, president of St. Francis until he retired in 2015, launched the growth fund in 1990 – when he was the school’s director of development – as a way to help the school’s prospects for long-term growth.

“Our operations are funded by tuition and our traditional fundraising,” Chiu said. “This is an opportunity to invest in longer-term things.”

The mission was to leverage St. Francis’ location and alumni network to enable the school to take advantage of startup opportunities.

“The idea was that you’d get venture capital folks to help the school participate in some of these private investments,” Chiu said. “We recognize of course that we’re a school – we’re not investors. So we really trusted the folks on the committee.”

Chiu, who came from St. Joseph Notre Dame in Alameda to take over the president’s role from Makley, credits the success of the growth fund to the St. Francis community.

“For me, for someone who is relatively new to the community, it’s an expression of how incredible our community is here at St. Francis,” Chiu said. “We have got such amazing folks who are longtime supporters of our school. For someone who was a parent and said, ‘Hey, I want to give St. Francis this opportunity’ – that is a testament to our community and what kind of school we are.”

Chiu listed three priorities for the Snap funds.

“I think this is really going to help us achieve all the priorities we laid out in the strategic plan,” he said. “One is our endowment, to be able to continue to maintain access to this Catholic Holy Cross education for as many students as possible. Two is to continue to invest in our faculty and staff to make sure they have the resources they need to do the things they do. And finally, it’s continuing to invest in our innovative programs. There are buildings we certainly want to build, and this will help us accelerate that work.”

A ‘darn unique’ model

The St. Francis Growth Fund experienced early success when a $25,000 investment in Advanced Fiber turned into $2.1 million. Although Advanced Fiber no longer exists, the multimillion-dollar return padded St. Francis’ endowment.

“Over the course of the past 25 years or so, we’ve made investments between $15,000 and $20,000,” Chiu said. “It’s not money from our operational budget – it’s money that people have donated to the school to allow us to make these sorts of investments.”

Chiu said the growth fund is rare in the world of secondary education.

“This fund was modeled after something Stanford has,” he said. “But I have worked in Catholic education for 22 years and haven’t seen anything like this. I would dare say this is pretty darn unique.”

 

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