97. Student-Focused VC Funds, Part 2 (Peter Boyce II)

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Today we cover Part 2 of Student-Focused VC Funds with Peter Boyce II of General Catalyst & Rough Draft Ventures. In this segment we address:

  • One of the biggest issues I’ve encountered at university is that schools and their students have been siloed. How have you considered bridging the gap between business, engineering, cs, and other schools?
  • Are you employing a sector or technology-driven thesis within this approach? Why or why not?
  • Why do you think that the returns for this model can be attractive for LPs?
  • How do you measure success of your efforts w/ Rough Draft? Is it the same set of financial KPIs that you’d traditional use or do you look at success differently?
  • Any missteps or mistakes you’ve made that you’ve learned from and has driven a change to the approach?
  • For those investors that have or want to focus on dealflow in university environment, what advice would you have for them?
  • For young entrepreneurs that are at a university and are interested in building a venture-funded startup, what advice do you have for them?

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Key Takeaways:

1- Growth Drivers of student-focused funds and student entrepreneurship
 
Universities are increasingly playing a role in supporting entrepreneurs where historically that has not been the case.”
  • Entrepreneurship focused classes
  • The rise of Computer Science
  • Innovation such as AWS, Github and Stripe have significantly reduced the cost of starting up and getting products into the hands of customers
  • Developments around university infrastructure allocating more support, classes and space for startups
  • Students were increasingly trying to understand; what are the sources of capital, where can we find mentors, how can we connect with VCs
  • Much more content available to help entrepreneurs navigate what it means to start a company
  • Lots of resources unique to universities that make them advantageous to starting a company
  • Outlier success of companies coming out of universities… driving even more students to become entrepreneurs
  • Alumni network support and angel investment has always been there but more recently they’ve further organized into angel groups and created funds to help in a more systematic way.
 
 
2- Process & Mechanics of the Student-Fund Model
  • Students are the core of the program
  • Rough Draft recruits students leaders that become representatives of Rough Draft on campus
  • Student leaders are running clubs, hackathons, informal social events and identifying companies to work with.
  • Every Monday the students invite in the best 2-3 startups to pitch.
  • Decision occurs the same day of the pitch
  • Rough Draft invests up to $25k and, in certain cases, they’ve partnered w/ First Round’s Dorm Room Fund, when the startup needed up to $50k to reach the next milestone
  • Uncapped Notes
 
3- Major Learnings from going through the process
 
  • More offline opportunities for people to come together in a low stakes, non-transactional sort of way. And many of these offline events are inclusive of all schools, which allows people to be brought together in a more social environment first before considering working together which, to Peter, feels like the right order of operations
  • Side benefit is they get exposed to what’s in vogue on college campuses
  • When initially considering this effort, they feared that a lot of the best CS talent might just go to grad school. They may just quit the startup and decide to get a masters. Yet, they’ve actually seen the opposite. Many strong teams have persisted with the startup despite great internship, job and advanced degree opportunities.
  • They didn’t anticipate how quickly some companies could accelerate to the next level. Never imagined that they’d make a $25k investment and have a team raise a $1M-$2M round a month later
 

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