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When James Marcus, chairman and CEO of UniversityAngels.com went to his fifth-year Harvard Business School reunion last year, he found himself having one of two conversations over and over. "It was either investment bankers with lots of money but nowhere to put it, complaining, 'Woe is me.' Or it was entrepreneurs talking about how they needed access to capital," Marcus recalls. It seemed a shame that the bankers with too much money and no place to put it couldn't hook up with the entrepreneurs who were desperate for cash.

That's how UniversityAngels was born. Marcus and three of his HBS cronies decided to create the connection and tap into the estimated 97% of the 10 million accredited U.S. investors -- people with $1 million of assets or $200,000 of annual income -- who haven't taken a flier on the private-equity market. Unique to Marcus' formula is that his online angel network is aimed solely at graduates of top business schools in the U.S. and abroad.

Here's how it works: Each alumni group has its own Web site -- CrimsonAngels for Harvard alums, EliAngels for Yale alums, PennAngels for University of Pennsylvania alums, and so on. Would-be investors fill out an application to show they have the necessary net worth or income to be considered and accredited investor. Once an investor's application has been accepted, he or she will receive e-mail offering possible investments. Opportunities that arise from the Yale community are shown first to EliAngels, and eventually are listed across the UniversityAngels network of 25 U.S. sites. That number will hit 40 by the end of June, not counting an additional four international university sites scheduled to come on line this month.

APPROVAL NEEDED. UniversityAngels is careful to protect the alumni entrepreneurs who post their business plans on the site. In the e-mail it sends to potential investors, UniversityAngels gives a brief idea of the project and personnel, and offers the opportunity to review a business plan. Before sending the plan to a prospective investor, UniversityAngels contacts the entrepreneur with information on the investor. The plan is released only with the entrepreneur's approval.

Tapping into alumni networks is a clever way of accessing angels, but it's also a difficult business model to implement. Currently, the company relies on presentations to alumni gatherings and advertisements in alumni magazines to generate investors and leads on deals. Marcus is working on convincing a university to let him use its alumni database in some form, although no contract has yet been signed.

Without some kind of arrangement with a university alumni association granting exclusive rights to their alumni lists, UniversityAngel's business model is easy to copy. If UniversityAngels can pull off some exclusives with university alumni offices, it will have an edge that no other online angel network can boast -- direct access to some of the wealthiest, most business-savvy angel wannabes in the world. So far, such deals are still in the works.

POTENTIAL RIVAL. Getting a university to agree to open up its alumni lists is no easy task. On one hand, institutions of higher learning are eager to make more of their alumni base. On the other, they can't risk alienating alumni who don't want their names appearing on some new mailing list. In addition, UniversityAngels offers potential competition for alumni dollars and focus, albeit it's asking them to consider an investment proposal rather than a straight donation.

Most business schools already have some form of incubator or networking system designed to get alums in on the ground floor of investing opportunities. For example, the Wharton School at the University of Pennsylvania runs Wharton Private Equity Network, a professional association of alumni in the private-equity business. It was set up to create networking opportunities among alums.

In a more direct link between student entrepreneurs and alums, Boston University's School of Management has turned its regular business plan competition into a chance for student entrepreneurs to link up with five venture-capital firms that back an incubator called the Hatchery. Students who participate in the extracurricular competition have a shot at a $1,000 prize. If the entrepreneur behind the winning plan agrees to it, the business plan is submitted to the Hatchery for funding.

INSIDE LOOKS. B.U. tried hard to come up with a way of helping students get access to capital without exploiting them or betraying their trust. The school does nothing but send the plan along and only with the student's permission. But even here questions of the school's role arise. The applications are reviewed by the university's Bronner Center, named after venture capitalist Michael Bronner -- a B.U. alum, one of the competition's application screeners, and an investor in the Hatchery. That means an alum gets an inside look at students' ideas.

Still, students are clamoring for just this type of exposure, and business schools have to provide it or watch their matriculations drop. Academics are left trying to tread a fine line between giving them what they want and moving away from traditional teaching goals. "It's important for the School of Management to be on the cutting edge of the economy," says Michael Lawson, associate dean for faculty development and research at B.U.'s School of Management. "But the business school has to remember its primary responsibility is to educate the men and women who attend it to be our future economic leaders."

Since students seem to get as much out of connections to deep-pocketed alums as the university does, the question of student exploitation may actually be secondary to other legal concerns. "A school has to be careful what it blesses," says Mark Fraga, managing director of Wharton Entrepreneurial Programs. "A formal partnership brings up questions about whether the university has done its due diligence."

PROMISING START. When an institution like Harvard or Yale lends its good name to an enterprise, although it may not be legally binding, some kind of sanction is implied. Suppose some alumni invest in an enormous flop, a high likelihood given the number of startups that fail. This could taint the reputation of the university sponsor, even if it has stamped caveat emptor all over the Web site.

If UniversityAngel's statistics for the first two months' of operations are anything to go by, alumni are keen on the idea. Roughly 1,000 investors have signed up on the UniversityAngels network since its debut in March. The network has already managed to foster one deal, and it has four more in the pipeline. That's good news for James Marcus and his team at UniversityAngels, because they make money only if a deal closes -- a cash fee of 4% of the deal's value plus warrants in the venture amounting to 10% of the capital raised.

Investors recognize that screening via an alma mater is no substitute for due diligence, but "knowing the [entrepreneurs] are people from top business schools gave me some comfort," says Robert Hanson, an investor in Atlanta-based Galileo, the one company that has received funding so far via UniversityAngels. A Yale alum with a little experience in private-equity investments, and the right income and net worth to be a "qualified investor," Hanson was having trouble finding deals for his money. UniversityAngels has supplied him with four or five ideas via e-mail, at no charge.

"EARLY WARNING." That's UniversityAngel's stated mission -- to bring deals to the isolated angel -- and Hanson is a convert. He's even thinking of taking a look at some other online networks, although up till now, he had never heard of the leading online incubator, Garage.com. "I wanted early warning of what's out there," says Hanson.

There are 9.7 million more investors like him out there waiting to get the word. If UniversityAngels can find them via their alma maters, it could unearth a mountain of private equity that previously went to mutual funds.