Entrepreneurs always want to challenge the incumbent, whether it be AT&T, Google or Walmart. But Ben Nelson has a much larger, more entrenched target in his sights: The Ivy League.

Nelson is the founder and CEO of Minerva Project, which bills itself as “the first elite American university launched in a century.” Academically-rigorous admissions criteria, online courses with limited class sizes, reinvented teaching responsibilities and global campuses. Oh, and significantly lower tuition than traditional institutions of higher learning.

If you think all of that sounds incredibly bold, if not naive, you’re not alone.

“When I first heard Ben’s pitch, I thought that it was really ambitious, if not impossible,” says Kevin Harvey, a partner with Benchmark Capital. “But Ben has really thought this through, and convinced me that it could be done.”

To that end, Benchmark has invested $25 million to Minerva — the largest seed-stage funding in the venture capital firm’s 17-year history.

Nelson says that the genesis for Minerva was in learning how many academically-qualified students were being rejected from America’s top universities. “Harvard’s dean of admissions, for example, said that 85% of applicants are qualified,  but less than one in ten is actually accepted… and it’s particularly difficult for foreign students trying to get into American schools. There is a basic supply and demand imbalance.”

So Nelson envisioned an elite university that eliminated the size constraints. Here’s how it works. Students will go through an admissions process that takes only academic credentials into account. Things like extracurricular activities, family legacies and financial donations are ignored. Minerva then will charge “less than half” of standard Ivy League tuition (i.e., under $20,000), plus around $11,000 per year in room and board. The room and board is optional, but those who use it will live in NYU-like urban dorms in major metropolitan centers around the world. Students also will be encouraged to live in different dorms each year, with travel costs baked into the boarding fees.

The curriculum will be offered online, with each class broken into two parts: First, Minerva will contract an established professor — most likely from a top university — to create a proprietary online lecture. It then will hire teachers to run online, interactive seminars for no more than 25 students per class — based on the lecture. Kind of like breakout sessions, except that the teachers all will hold advanced degrees, rather than be current graduate students.

“There are lots of people out there with PhDs who haven’t been able to find work because they either don’t like research or aren’t very good at it,” Nelson says. “But they may be great, knowledgeable teachers — and those are the people we’re looking for… If they disagree with the lecture, or offer a different perspective on the subject matter, we will encourage it. We’re trying to teach students how to think, not just how to listen and repeat.”

Once students graduate, Minerva plans to activity promote their careers — particularly by making introductions to others in a student’s chosen field.

All of this does, of course, cost money and both Nelson and Harvey acknowledge that Minerva’s initial students will cost more than they pay (particularly once potential scholarships are factored in). Neither would identify a break-even point, except for Nelson saying that Minerva would be profitable if it got to the point of having as many students as his alma matter, The University of Pennsylvania (approx. 25,000).

Benchmark’s Harvey said that Minerva would save money by eschewing physical infrastructure and research-focused professors. Not quite clear on the latter point, given that such folks generally bring in more money than they cost (via matching grants), but his broader point is that building Minerva is a lot like building a luxury brand.

“Luxury brands are about elite access. In consumer goods, that’s elite cost. In education, it’s elite criteria for admission. Minerva is maintaining those high standards, but not artificially limiting the number of people who can meet it…. This really may be redefining education.”

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