Undergraduate Blog / Career Development

Tips for raising money for your startup while in college

There have been many articles written about college students raising money for their startups while in school. Some investors are totally against the idea, while others welcome youth entrepreneurship and the innovation that it can spur. If you are one of the young entrepreneurs raising money for your startups, here are a few tips:

  1. Seek funding from smaller firms – Investing is a numbers game, so the amount of money a firm can invest depends on the size of the fund. The larger the fund, the larger the amount of money the firm must invest per company to get the returns they are seeking. Typically, college founders seek less money. The most notable reasons for this is that there are not many people are willing to give a twenty something year old hundreds of thousands (or millions) of dollars and college founders typically work out on their campus, so they have lower overhead costs, though there are other reasons as well. Anyway, the point is that college founders typically don’t need huge amounts of capital early on, so it does not make since for larger venture firms to invest unless you’re looking at the next Facebook or a capital intensive business like Uber.
  2. Seek investors that have a track record with young entrepreneurs – Most investors have a preference for experienced entrepreneurs. Even if an entrepreneur has previously failed, past performance allows investors a better understanding of founder’s abilities. For example, if a founder’s previous company had a great product, but poor sales. Then an investor will trust the persons next product, but will take a closer look sales plan and even force you to add a cofounder to run the sales and marketing.
  3. Get a cofounder – Running a business is hard enough by itself, doing so in college is twice hard. So get a partner that has a different skill set who can support and collaborate with you. It will keep your grades up and push you to keep working when the work gets hard. Plus, work is more fun with a friend.
  4. Don’t skip classes (on a regular basis) – When running a business, there’s always a fire to put out. Many of these issues come during the day when you should be in class. My advice is to only skip class in the most urgent of situations, because most issues can wait until your class ends. Yes, your company is important, but so are your grades. Don’t let yourself fall in to a position where you must choose between school and business, it takes a lot of work, but you can be successful at both.
  5. Money doesn’t grow on trees – Remember that the money you receive comes from real people, not just the investors. Many pension funds invest in alternative assets (I.E. venture capital firms), so if you lose your investors’ money, you are also losing the money of everyday people.