Most American private schools still raise money the old-fashioned way — through silent auctions, annual giving, and a yearly gala with mixed drinks and canapés.

Crystal Springs Uplands School, a 569-student private day school on the peninsula between San Francisco and Silicon Valley, still plans to hold a gala this year, but it is no longer the main source of fundraising. Increasingly, the money comes from somewhere else.

Crystal Springs is one of a small but growing number of Silicon Valley private schools that have created what amount to miniature venture capital funds. Capitalized by donations from the school community, and guided and overseen by parent-investors from firms such as Lightspeed, Notable Capital, and Sequoia, the funds are aimed at early-stage, pre-IPO companies.

The model was pioneered by Saint Francis High School in Mountain View, where a $15,000 pre-IPO investment in Snap turned into $34 million when Snap went public in 2017. Nearly a decade later, with the IPO market heating up, a handful of schools are sitting on private portfolios whose value will not be known until the companies go public or reach other liquidity events.

SpaceX's June debut on the Nasdaq — the largest IPO in history, at a valuation above $2 trillion — suggested that the era of huge tech companies staying private indefinitely may be ending. That era was extended in part by the 2012 JOBS Act, which raised the threshold for private companies to trigger SEC disclosure requirements from 500 to 2,000 shareholders, allowing startups to raise far more private capital and delay going public. Anthropic and OpenAI are widely expected to follow SpaceX founder Elon Musk into the public markets. For schools with pre-IPO stakes in companies of that scale, even a small check written years ago could produce the kind of windfall Saint Francis saw with Snap.

By any measure, this is a long way from a bake sale.

A mini VC fund

The mechanics are relatively straightforward, even if the access and expertise required to make these funds work are not. A school sets aside a small pool of capital — donated by parents or alumni, and never taken from tuition revenue or the operating endowment — and a committee of volunteer investors vets potential deals and decides how to proceed.

At Saint Francis, the vehicle is called the growth fund. Barry Eggers, co-founder of Lightspeed Venture Partners, has chaired the advisory board for years, even though his own children graduated long ago. The fund was started in the 1990s by two parents in the venture capital industry who contributed about $250,000 in seed money. Today, it is overseen by more than half a dozen investors from firms including Battery Ventures, Mayfield Fund, Meritech Capital Partners, Sequoia, and Lightspeed.

"We have a mix of people who have early stage and late-stage deal flow," Eggers said. "And we put it together, and we built a fund."

Eggers generally asks each member to bring one deal a year. The fund invests in about 10 companies annually, writing checks of $25,000 to $50,000 each. He estimates the fund has generated roughly $50 million in cumulative lifetime returns, though, like other trustees and school officials, he declined to disclose specific investments.

"We look a lot like an early stage VC fund," Eggers said. "With a little bit of growth investing mixed in."

The schools have a major advantage over a typical fund because the labor and expertise required to manage the investments are donated. Most venture funds charge management fees of around 2% of assets annually and pay investment professionals a share of profits — known as carried interest, or carry, typically around 20% — based on long-term returns.

"There are no fees and carry here," Eggers said. "We're volunteering our time, and we're not taking any carry."

Because Saint Francis and similar schools are 501(c)(3) nonprofit entities, they do not pay capital gains tax on returns, meaning their net returns are likely higher than those of a typical fund. The structure mirrors a model that major universities have used for decades — Stanford's endowment, for instance, has long allocated a portion of its portfolio to private equity and venture capital — but at a fraction of the scale.

Crystal Springs has adopted a similar structure with its Crystal Growth Fund, said Brian Talbott, the school's chief financial and operating officer.

"We'll take the money that the donors have given us and invest it through the parents' or alums' funds into those pre-IPO investments," Talbott said.

Parents at venture firms can also donate money or direct small portions of their personal investment allocations in deals to the school. The Crystal Springs fund is only a few years old and was conceived by a parent who proposed the structure. According to Crystal Springs' public records, the school held no private investments through fiscal 2023. By June 2025, it carried about $1.75 million in private equity investments out of a total $61.1 million, which also included mutual funds, Treasury bills, and equities.

"They are providing access for us that we likely would not have otherwise," Talbott said.

Menlo School, a private college-prep school in Atherton with about 800 students, has its own version of the model. The school's most recent Form 990 filing, covering the year ended June 30, 2025, shows a Menlo Venture Capital Endowment comprising roughly 36 individual investments in venture capital partnerships and early-stage companies. The MVCE totals less than $1 million, a fraction of Menlo's $122.6 million endowment, and is invested through established managers and the school's 23-member investment oversight board. The board includes school leaders and trustees from Bessemer Venture Partners, Scale Venture Partners, and Sobrato Capital.

For the schools, the expertise of parents and alumni is key. Jason Curtis, president of Saint Francis, said he is an educator, not an investor.

"That's not my skill set," Curtis said.

He relies on the committee to vet investment opportunities, though he meets regularly with the group and school leaders and stays informed about the investment agenda. Saint Francis is a nonprofit, but the IRS classifies it as a subordinate, which means it does not file Form 990 reports.

Curtis said his focus is on where the returns go and how the program can benefit students, teachers, and the broader school community. The main priorities are tuition assistance for families that need it, which receives the largest share; compensation for educators, including bonuses that help teachers afford to live in Silicon Valley, where the median home price has hovered above $1.5 million for years; and new programs or facility improvements.

The mini VC fund approach also creates a bridge between the companies the schools invest in, the VCs sourcing deal flow, and students who may be interested in entrepreneurship and investing in Silicon Valley. Curtis has brought students into growth fund meetings and invited portfolio companies to campus.

"The opportunity to expose our students to people in business they might never meet, or might not know anything about, is really remarkable at this age," Curtis said. "And then to actually have students interact with them is enormously important."

The Saint Francis Snap investment is now Silicon Valley lore. In 2012, the school's growth fund invested $15,000 in Snap at Eggers' urging. Lightspeed had been one of the company's first outside investors, and Eggers noticed his own children sending snaps on the app. When Snap went public in March 2017, the school's stake was worth about $34 million.

"Snap was an anomaly — a happy anomaly — for us," Eggers said. "We made over 2,000 times our money on it."

Simon Chiu, who was president of Saint Francis at the time, stepped into what he described as a fortunate inheritance. School leaders quickly agreed that most of the Snap windfall would go into the endowment, and a separate pool was created to fund teacher retention bonuses. Saint Francis also recently completed a multimillion-dollar capital campaign that included gains from the Snap investment.

Patience pays off

One of the biggest barriers to replicating the venture-fund-within-a-school model is that schools run on annual budgets, while venture returns often follow a J-curve, with years of negative cash flow before positive gains appear.

"It could be five years, it could be eight years before you see returns," Eggers said. "A lot of schools find that hard, because they have to focus on the here and now."

The challenge requires thinking in decades rather than school years.

"It requires a lot of patience," Curtis said. "And the truth is, all of us as schools, we have immediate needs."

Not every investment succeeds. Eggers said the system is not perfect, but he argued that the point is to take calculated risks, which is why the checks are relatively small.

The second barrier is deal flow. Committees need access to high-quality, vetted investment opportunities, which means they need connections to some of the most successful VC funds — a resource concentrated in a handful of metropolitan areas.

"If a deal is good enough for Sequoia, Meritech, Battery, Mayfield, or Lightspeed, then it's good enough for Saint Francis," Eggers said. The peer group serves as its own screen, but it also makes the model easier to replicate in metro areas with strong firms such as Los Angeles, New York, Connecticut, and Chicago.

The VC approach is part of a broader shift in private schools' fundraising practices. Some schools have started moving away from annual event-based fundraisers such as galas, said Laura McGarry, managing principal at the nonprofit fundraising consulting firm Graham-Pelton. The return on investment for galas — which are expensive to stage — is significantly lower than other forms of fundraising, and they often require one or two staff members to spend much of their time on the event rather than on education.

Schools are also weighing the signal sent by a high-priced gala ticket when not every member of the community can afford to attend.

Crystal Springs, for example, has turned to a once-yearly ask from donors to help raise money for the school, Talbott said.

Schools are not the only nonprofits benefiting from IPOs. When Figma went public in July 2025, the largest selling shareholder was the Marin Community Foundation, a Bay Area nonprofit focused on affordable housing that had received about one-third of cofounder Evan Wallace's shares before the offering. The nonprofit made $440 million in the IPO.

Waiting for companies to "graduate" in an IPO

None of the investments in Crystal Springs' early portfolio have gone public yet, Talbott said. He declined to name the companies the school has invested in, but acknowledged that some may be approaching the public markets.

"Some of the investments are likely closer to potential IPOs than others," Talbott said.

Eggers said schools from the East Coast to Los Angeles have contacted him about how to replicate the Saint Francis model, and other schools in the Bay Area have explored it as well. McGarry said she has seen the most interest in New York and Connecticut, where more families work in finance and private equity.

Eggers tells interested schools that one-off windfalls like Snap are great, but the real value comes from building something permanent, especially as more companies stay private for longer.

"I'm talking about trying to build a fund that is ongoing," Eggers said. "This is a way for high schools to take advantage of that, and really participate in it."

This story was originally featured on Fortune.com