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Parent company to student entrepreneurship hubs under close watch by feds, media

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By Connor Murphy


 

In a moneymaking move from October 2015, the University at Albany was named, along with five other New York colleges, the recipient(s) of a three-year, $4.5 million investment by the Blackstone Charitable Foundation. The award comes as a part of Blackstone’s nationwide business-centered Launchpad program, and is shared with Cornell, NYU, Syracuse University, and the University at Buffalo. Blackstone Launchpad’s website reads that the campus-driven initiative “has the potential to generate some 4,000 new ventures and 6,000 new jobs across New York over the next five years.”

“As a comprehensive public research university, UAlbany plays a significant role in New York state’s economic growth through our support for innovative research and entrepreneurship,” President Robert J. Jones said at the Oct. 23 press conference in New York City. “Blackstone Launchpad will help solidify this role by connecting and strengthening our entrepreneurial resources across the university.”

Less than three weeks before the partnership announcement, at which U.S. Sen. Chuck Schumer and Blackstone Group President and COO Tony James spoke, Blackstone was fined by the Securities Exchange Commission (SEC) for $39 million. The multinational investment firm is valued at an approximate $330 billion spread across over 500 subsidaries, and was the target of a federal probe regarding whether or not they put their interests ahead of investors before they settled on Oct. 7.

The Blackstone Group and the Blackstone Charitable Foundation are technically separate entities, something stressed by university officials.

“While we were aware of the fine, our work in attaining the LaunchPad funding is with the philanthropic arm of the Blackstone Group, the Blackstone Charitable Foundation,” UAlbany spokesman Karl Luntta replied in an email.

“We worked hard to get LaunchPad to UAlbany because we believe it’s a progressive program that will have multiple, ongoing benefits for our students and the community we live in,” Luntta continued. “This was a competitive grant, and UAlbany presented a competitive proposal that was selected for funding.”

He also added that there was a written agreement between the university and the Foundation, but would not elaborate on the specific details.

A 2013 tax filing by the Blackstone Charitable Foundation shows five holding companies, including the parent company providing $400,000 in capital gains, making up for more than 20 percent of the Foundation’s net income for the year.

Peter Rose and Christine Anderson, spokespersons for the Blackstone Group, haven’t responded to multiple requests for comment.

“Each regional program established through the Blackstone Charitable Foundation is linked, drawing ideas and best practices from across 21 campuses, and giving student entrepreneurs in New York access to an international community of over 500,000 of their peers and expert advisers,” a November UAlbany press release reads. The foundation was recognized by President Obama’s “Startup America” initiative in 2011, when there were only three LaunchPad locations in the country.

The physical hub is located on the Campus Center first floor next to the Student Association offices, with other LaunchPad labeled rooms in the Massry School of Business Building. The Campus Center renovation was part of a months-long process that replaced a sofa and coffee table-laden student lounge with glass enclosures and computers, as well as the Blackstone insignia.

In a similar move, Syracuse plans to use its $900,000 portion to add their physical hub to the university’s Bird Library. The location choice came under scrutiny from the editorial board at The Daily Orange, Syracuse’s student paper, which wrote in October that “while Bird Library was likely a practical selection to house the program for the time being, it is not an ideal space for the program in the long run.”

“Students take advantage of campus libraries for peaceful environments in which they can do their homework and study in quiet spaces,” the editorial continued. “This restrictive atmosphere would contribute to a strange setting for the entrepreneurship center of campus, considering these spaces should promote creativity and brainstorming exercises that should not be suppressed to maintain the quiet levels of the library.”

While specific LaunchPad locations and other student-related Blackstone affairs may be a target of attention from college media, the Blackstone Group has been in crosshairs of wider news since at least 2013.

In Oct. 2013 Bloomberg first reported a “self-dealing” scheme carried out by Blackstone and Spanish gaming operator Codere. It was reported that just days before Blackstone made a multi-million dollar loan to Codere, they took out a credit-default swap (CDS) on the loan should Codere fail to pay back a third party. The Spanish gambling company failed to pay back the loan, and Blackstone made a reported $15.6 million off its CDS.

The story became a segment on “The Daily Show” with Jon Stewart in Dec. 13 of that year, in which the host likened the deal to the “burn down the restaurant for insurance money scene” from the 1990 movie “Goodfellas.”

“We love Jon Stewart and he continues to be one of the funniest people on TV,” Blackstone spokesperson Peter Rose wrote in a 2013 statement. “But the somewhat boring truth is that we cooperated with Codere and its advisors to save it from bankruptcy or liquidation. We provided capital when no one else would, which allowed the Company to live and fight another day.”

On Dec. 16 last year, Blackstone again became a part of the news cycle, with the International Business Times reporting that the investment firm has been a major player in shaping next year’s presidential election. Its president, Tony James, held at least one fundraiser for Hillary Clinton’s campaign, and although the former Secretary of State was not in attendance, the reported $400,000 in proceeds was split between her campaign and the Democratic National Committee.

It isn’t just democrats that are partly supported by Blackstone – the firm’s chairman and CEO Stephen A. Schwarzman made a $100,000 donation to Jeb Bush’s super PAC earlier this year.

The Blackstone Group, described by The New York Times as the largest investment firm and reported to have grown its assets by $200 billion since its 2007 initial public offering, remains in a spotlight mostly separated from their charitable arm, but forever entwined because of the shared entrepreneurial ideologies.

“New York’s superb universities have always drawn some of the country’s most driven and talented young people,” Tony James said at the LaunchPad press conference. “The Blackstone Launchpad program will provide these students with the tools to build strong enterprises rooted in the state and connected to a global network of entrepreneurs.”

Correction: An earlier version of this article reported that the Blackstone Group and four subsidiaries shared $400,000 in assets with the Blackstone Charitable Foundation in 2013, or roughly 20 percent of their total worth at the time. It has been corrected to say that that $400,000 was filed as a capital gain by the Foundation, and it amounted to roughly 20 percent of their total income for the year 2013.

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