How 2 Raise from a Student Venture Fund
Are you a student entrepreneur looking for funding? Consider connecting with a student venture fund! The Blank Center hosted a How 2 Tuesday to introduce students to this concept. Shereen Shermak, Partner of SoCoVentures Syndicate and Advisor to Flybridge Capital, moderated a panel with three representatives of student venture funds: Jonathan Marchetti ’18, Venture Partner of Contrary Capital; Will Manidis, Olin College ‘21, Partner of Dorm Room Fund; and Mojia Shen, Wellesley College ‘18, Venture Fellow of Rough Draft Ventures.
Shereen: What is the difference between a student-focused fund and a traditional venture capital fund?
Jon: Especially at Contrary Capital, we aim to be the first money in. We try to get in, give you money, and syndicate the process with a top-tier venture fund. We want to part of your growth process. We’re not worried about getting seats on your board. We provide money, mentorship, and networking companies. We foster community and the growth of both the company and the entrepreneur.
Shereen: Does all money come from a separate fund or part of a larger fund?
Mojia: For Rough Draft Ventures, the money comes from General Catalyst, a top VC firm. We get a lot of support from General Catalyst, and our companies receive this support as well.
Will: Dorm Room Fund is powered by First Round Capital.
Jon: Contrary Capital operates independently. We front the capital and provide support to students who wouldn’t otherwise have access to money from a fund.
Shereen: As a student entrepreneur, when is the time to reach out to you?
Will: You can reach out any time. We’re here not only to give money but also to help companies through the process. Whether you have a product, some traction, you’ve bootstrapped as much as possible, or you’re looking for strategic mentors to get to the next level, we’re here for you.
Mojia: I was a student founder. During my first year of college, it was hard to reach out to VCs. They speak a different language and I didn’t know how to approach them. It means a lot to have a person on campus you can reach out to for support. The whole process is valuable. We tell you when we think you’re ready to pitch. The goal is to get capital rather than just continuing to pitch.
Jon: We’re here to work with you. Reach out if I can help at any point in the process, such as with connections, advice, or refining your pitch deck. I’ve benefitted from living in eTower- it’s made it easy to vet and understand companies. There are two people from CC in my pod.
Shereen: Do you work you alone?
Will: We have nine partners across seven campuses. We meet every Monday night. The companies first meet with one of us on campus, then they meet with someone off campus, then they present to all nine partners.
Jon: CC is similar, but we have over 100 partners. We vet as a pod on campus, then the company gets pushed to the partnership meeting. These meetings are open to all 100+ CC partners, and CC’s founder sits in on every meeting. We ask questions and move toward a final decision.
Mojia: One person runs General Catalyst and our program, but otherwise we work on our own.
Shereen: In traditional VC models, the process is similar but you might take 20 calls in a week, actually speak to five or six, filter down, then move to capital when the entire partnership has signed off. We look for later stage companies, though.
What are the keys to building a successful startup in school?
Will: Pick a problem you actually care about. This way, you won’t mind putting in 40 hours a week. As long as you work hard on the idea, get early traction and get to market early, we will speak to you. Knowing the challenges that you’ll face is important.
Jon: We’re not here to have founders drop out. Leverage your school’s network, especially because students have connections within their own schools. CC is in over 50 schools, so if you need answers we can help.
Mojia: With first-time founders, it’s easy to get too passionate & become blind to anything except the problem. Validation is key. Take steps to make sure that there are real customers who will pay for your service. List all of your hypotheses, check each, find holes in them, and make sure each assumption is correct before moving on.
Shereen: What resources do you offer other than capital?
Mojia: A few things. The most powerful aspect is our portfolio companies and General Catalyst’s portfolio companies- about 150 companies. It’s a broad network. We host portfolio dinners at least once a semester. You also get a wide mentor network from GC’s successful portfolio companies, WeWork space, AWS credits, and more.
Jon: Our network is one of our biggest value-adds. We graduate 20 to 30 people a year, and as an alum, your network is always growing. You can get access to our talent pools and LPs, including the founders of Tesla and Twitch, for example. It’s all really impressive. We give the companies we invest in the option of working in San Francisco for a summer to focus on accelerating their business. This is the first year we’ll run this program.
Will: We view capital as the lowest benefit we provide. Over the last five years of running the fund, we’ve supported over 150 companies. We can hook you up with mentors in your industry. Many Dorm Room Fund partners go to work in venture capital. We can kick you to any firm in the country.
Shereen: A typical VC fund might do 6-20 deals in a year. How does an entrepreneur get access to you? How does someone make a connection with you?
Jon: It’s easy to find us since we’re all students. If you want funding, just go to our website, find the school you go to or one close to you, and reach out to local partners. Don’t pitch your business through email, just say you want to have a conversation and be personal about it. We’re investing in you as an entrepreneur so I want to meet you. You can also reach out via iMessage anytime.
Will: We read and reply to all emails within 24-48 hours, and the vast majority lead to meetings.
Mojia: We view this as a relationship-building process. Each email and meeting is an opportunity to build and continue a great relationship. Don’t try to seem too smart but come off as arrogant. Make sure you prioritize the relationship.
Shereen: I always recommend saying something about the person you’re contacting to warm up the paragraph. The first letter in your note should never be “I,” unless you’re saying “I noticed that you recently did…” Talk about the other person.
Jon: When we meet, don’t treat us as a roadblock. That’s an easy way to not get a follow up meeting. We have a job to do too.
Shereen: It’s a quick goodbye when they look at you as just a student or gatekeeper. With that in mind, how do we make sure that student-focused funds represent women and minorities?
Mojia: Two things. We try to have a diverse group of Fellows and Student Partners. With such a diverse group of Partners, entrepreneurs feel comfortable reaching out to people like us. We also have programs to help diverse founders, including retreats for female founders. I go to Wellesley College, which helps us reach more female entrepreneurs.
Will: We publicly audit our diversity each year. We’re actually beating the industry. Dorm Room Fund’s partners are 28% female, and we are close to 40% for deployments to female teams. Our firm is only 44% white versus the 89% industry average. We’re developing a presence at historically black universities. Our goal is to far surpass industry averages.
Jon: It’s not easy. We first have to acknowledge that the disparity exists. When CC was founded, it was predominantly white and male because that’s how the VC industry looks. When we launched last fall, we gained female and minority partners. 60-70% of the applicant pool were either minorities or women. It’s a work in progress, but we’re taking baby steps. One thing that helps within CC is that there are a lot of partners in Boston. We all meet monthly, have conversations, and relate to each other across jurisdictions.
Shereen: We briefly talked about “don’ts” before. What else should entrepreneurs avoid in terms of moving their business model forward or capital raising?
Will: Never lie to us. We win when you win, and we want to support you. Be fully honest and err on the side of total disclosure. We are not here to evaluate you, we’re here to get you to the finish line.
Jon: Don’t belittle us. We are mutual partners and we’re all students. I have a network and expertise. Focus on relationship-building. Don’t expect to get funded and don’t take kindness as a definite yes. We only invest in 8 to 12 companies a year, but we’re still here to help you. Getting a “no” doesn’t mean your company won’t succeed, it just means that it’s not a fit for us at this time.
Mojia: It’s a bad sign when we have a meeting where one of the co-founders doesn’t talk and seems disengaged. Show engagement and passion, or don’t come. The team dynamic is important. We want to see that you are all engaged because we want to trust all of you.
Shereen: Don’t send people to the meeting who aren’t part of that specific conversation. Only bring the people who are going to be talking about the subject at hand. The founder always needs to be there.
This was an extremely helpful How 2 Tuesday for students looking for investment opportunities. Thank you Shereen, Jon, Will, and Mojia!