96. Student-Focused VC Funds, Part 1 (Peter Boyce II)

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Peter Boyce II of General Catalyst & Rough Draft Ventures joins Nick to cover Student-Focused Venture Funds, Part 1. We will address questions including:

  • Today we’re talking about University and Student-focused funds… First off, can you give an overview of the hypothesis here and why you choose to launch a student-focused fund?
  • Can you talk us through the process… so from early identification of a student and their idea to funding closed?
  • Student-focused funds aren’t new, but they are growing at a fast rate. Pitchbook found that, as of 2016, there were 44 college-focused funds and investors groups, many of which were new. Why do you think we’re seeing this growth?
  • Are you familiar with First Round’s Dorm Room Fund? If so what are your thoughts on what they’re doing and how are they similar or different compared with Rough Draft?
  • How did you identify the student leaders/ambassadors on campus to partner with on Rough Draft Ventures?
  • Have you found that students are ready to be CEOs or do they require additional help, coaching and/or a co-founder with more experience building and running a company?
  • What are the biggest differences between your investment approach with the student-fund vs. your approach with non-student-run startups?

Guest Links:

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*Please excuse any errors in the below transcript

Nick: Today #Peter Boyce II joins us from New York City. #Peter is an investor at #General Catalyst Partners and founder of #Rough Draft Ventures. And previously, #Peter has worked for startups in edtech, fintech and media. He’s worked in tech focused investment strategy at a hedge fund, and he also founded #Harvard Ventures and #HackHarvard while attending school there. #Peter, that’s quite a breadth of experience. I can’t wait to hear how such a young guy has done all that you have.

Peter: Just doing the best I can. Thanks so much for having me #Nick

Nick: Absolutely. So can you tell us a little bit about your story and also you got involved in startup investing?

Peter: Yeah, absolutely. Yes, so you know, I, I, I’ve really, you know, spent a lot of my early career and, you know, in high school basically helping fix computers. And I was kind of like the, the computer geek that everyone knew. And when I got to college I kind of, you know, entered the, you know, the, the calling from the community and what everyone kind of relied on me for. I spent a lot of time thinking through just, you know, how can I, you know, make technology and startups in computer science a, a part of my college experience. And I worked together with a group of friends to create an on campus accelerator program called #HackHarvard. And that for me was, you know, I had taken what I had seen and, and learned and been a part of in the New York startup ecosystem and basically brought it to campus. And so what would it look like if you got a group of, you know, really smart folks together that want to work on side projects and startups together? And so we created that in, you know, my sophomore year. And I think from that point on when we hosted the, the demo day in January, you know, the day before spring semester started, I kind of knew that I wanted to be involved with, with startups. I wanted to help my friends build companies and, and launch their ideas. And so, you know, I basically spent the rest of my time in school just trying to think through, you know, how can we expand this work, how do we, can we build on this. And it, you know, ultimately took me to joining another startup, spending my summers there, called #Skillshare here in New York. But also it helped me kind of connect the dots and, and it gave me a way to engage the venture and startup community in Boston. So I spent a lot of time, you know, just getting amazing VCs and amazing, you know, founders and engineers back to campus to spend time with students and to, to get it super charged to build companies. And so that’s kind of how I ended up learning more about venture and my first exposure.

Nick: Out of curiosity, how did the, the startups at that very first demo day for #HackHarvard turn out?

Peter: Yeah, you know, it’s, it’s funny. You know, one of the teams I’ll, I’ll share , you know, ended up taking some time from school, joined #YC. I advised the company and then they ended up signing their company and then came back to campus. So the founder #Merril came back to school. And I actually was able to get him to join the # Rough Draft Ventures student team. And what’s amazing is his kind of story of building his company and, you know, his process of fund raising and navigating that was a huge part of what inspired me to start #Rough Draft Ventures, to, to create a platform for empowering and supporting student entrepreneurs. And so it was really fun to be a part of that early story and then to have #Merril come back and be a part of #Rough Draft was, was really fun.

Nick: What was that company, the #YC company?

Peter: It was called #PollVaultr. It was super slick and easy polling focused on tablet mobile. So the idea is you could go into like a yoghurt store or something like that, have a you know nice little iPad right next to the register, click your favorite flavors, they could aggregate the feedback, and the company can make better decisions.

Nick: Cool, love it, love the name. And then how about your sort of transition over to #General Catalyst and then

Peter: yeah

Nick: founding #Rough Draft. Can you talk about that just a bit?

Peter: Yeah, yeah absolutely. So yeah, so, you know, senior year I figured, you know, I’ve got one more year left in school. And I, you know, created these student groups on campus and I figured I had time for one more project. And so I was really excited to think through, you know, so how do we think about creating more support for student entrepreneurs. And the, the thing that was coming up time and time again was access to, to capital, access to mentorship, and access to a peer community. And, you know, one of the things I was excited to do was try to figure out okay how can you know a venture fund create a program to, to support this kind of situation that’s not just a Harvard kind of dynamic. I mean, any university has amazing folks that are interested in building companies, you know. How do you kind of get them the capital that goes above and beyond, you know, business plan competition

Nick: Sure

Peter: but also it didn’t necessarily, you know, necessitate dropping out of school raising two million bucks. Because not everyone’s ready for that. So we kind of used that as the frame and the kind of architect of #Rough Draft Ventures. And so, I  had gotten to know the team at #General Catalyst, you know. They were, they were champions for the student ecosystem in Boston. I spent a bunch of time with them. And so yeah I kind of pitched them on this idea. And so I basically spent, you know, the first few months of senior year kind of architecting the program. And then we laughed it December of 2012. We brought together the first students that basically act as kind of the core. And we did our, you know, we made our first investment January of 2013. And you know, the rest has kind of been history. And so the process of getting that off the ground with #GC, you know, I , I fell in love with the team, fell in love with their, their vision, their support for, for what I was doing. And so you know, when it came time to think about, you know, what I should do post graduation, there, there couldn’t have been a better, better fit. And so, you know, that was how I kind of joined the team at #General Catalyst to continue to grow and expand the work we do with #Rough Draft, and also to join one of our two and to be one of our two investors based in New York. And so we’re really excited about #GC’s plan to really you know kind of create a full time presence and build up our ecosystem in New York. And I’m originally from New York. And so I was like oh my gosh I can, I can have the, the two best jobs in the world in one

Nick: Awesome. Well, today I would love to focus on the #Rough Draft side of things, and sort of deep dive on the university and student focus fund side. So, first off, can you give an overview of your hypothesis here and also how you chose to launch that student focused fund?

Peter: Yeah, absolutely. So, you know, a lot of it was just kind of born from, you know, my experiences, you know, as a student working alongside friends that were building companies that were, were navigating a lot of this for themselves. You know, they were thinking through, you know, what are the sources of capital or when you find ventures how do we connect with VCs. You know, a lot of for a lot of students, you know, the first time founders, if they start, you know, a side project or a company while they’re on campus. And so there are a lot of kind of unanswered questions. And, you know, it’s encouraging because I think a lot of dynamics today that are, that are continuing to unfold make it even more and more advantageous for students to be able to find answers to their questions in building their first companies. And also to get inspired and excited to kind of take control of their own destiny to, to build companies. And so I kind of saw and felt all this dynamic first hand. And so when I thought through the, the thesis, you know, the, the handful of pieces that I think were absolutely essential were, so number one there’s a, there’s a really awesome legacy of student entrepreneurs and, and folks that have built companies on campus. And whether, you know, you look at #Mark Zuckerberg, you look at #Bill Gates, #Drew Houston, #Evan Spiegel, you know, there’s, there’s an amazing set of, of game changing companies that were built by young people hanging out in universities. So I think it starts there. I think the second piece is just the role of, you know, kind of like content and, and the fact that you can get a lot of answers about company building now. So there are blog posts, there’s hacker news, there’s you know podcasts like yours that are increasingly helping entrepreneurs, you know, and students kind of navigate what it could be to start a company. And to complement that you also have a lot of, a lot of kind of resources that are very unique to universities that I think make them really advantageous places to start companies, right. So you got classes, so you got, you know, the rise of computer science across these universities giving you know students the skills to, to build products earlier and earlier

Nick: Yep

Peter: Two, you got professors that can act as kind of, you know, mentors and advisors. Also the fact that like the cost of starting up has come down so much. So whether it’s, you know, #AWS, #GitHub, #Dropbox, #Stripe, you know, the process of getting a software product up and off the ground and into the app store, into the hands of customers has, has come down significantly. And every year it gets cheaper and cheaper. And so, you know, students that are, you know, enrolled can do more and more, you know, in their nights and weekends. And then also I think there’s universities are increasingly playing a role in supporting folks that want to think through building companies. Whereas historically that hasn’t been the case, you know, in a, in an even distributed way across universities. So I think we need to take all those kind of dynamics together, you know. I think you have the recipe for something that is, you know, an insanely special ecosystem for big ideas to be started and created by amazing young people that are ambitious and, and really don’t have, you know, they don’t have really any bounds to their imagination around what’s possible. And so I think that’s a really, really amazing, amazing platform for startup creation.

Nick: Awesome. So I know there’s a few different models here. There are these student focused funds that kind of operate like a scout program and empower the students to find startups around campus and make investments themselves, there’s student focused funds where the investors do the evaluation and create sort of an incubator. Can you talk us through your process and how it works at #Rough Draft from, you know, very early identification of the student and, and their idea to a funding close?

Peter: Yeah, absolutely. So, so our model is, is focused on a student team. They kind of represent a bunch of different schools. And they are the core of the program. You know, I was one of those students when we were starting the program. And you know, the, the thinking here is that I think students have knowledge and relationships and you know, so many of them are looking for ways to, to support their peers and to basically be the connector, the help, the you know, the early advisor to their friends that are building companies. And so #Rough Draft kind of acts as a, acts as a, a fund to, to basically support that, right. So they’re the ones that are identifying really amazing, you know, teams for us to, to work with. And so every Monday we get together as a group. The students invite in the best kind of two or three startups that they’ve come across, we hear those pitches like any kind of venture firm. And then the students basically come to decisions that evening. And so, you know, a big part of what we want to do is we want to make #Rough Draft the venture model and the process that we felt that students would definitely want to have, right. So really fast decisions, access to the capital and super friendly terms, we do on cap notes, we do up to $25,000. And it’s basically this kind of this, this core group of, of students that really have their, their fingers on the pulse of who’s creating, you know, the best ideas on their campuses. And so that’s, that’s our model. Our model is to, to really kind of create a, a platform to empower them.

Nick: Wow! So you guys are meeting once a week and reviewing

Peter: oh yeah

Nick: reviewing a handful of startups. Does this happen all, all year or this

Peter: all year. During the semester, yes. And we do a, we do a fall semester and we do a spring semester,

Nick: wow

Peter: but yeah, I mean, you know, students are incredibly busy but, but the sessions together are really, really, really focused and great.

Nick: That’s a lot of startups for one campus

Peter: Yeah. It took, you know, so we cover a bunch of different campuses. So that’s, you know, a big part of it too is we’re not just looking at teams at MIT or Owen but it’s North Eastern, it’s Babson’s. So right now we’re, we’re looking at startups, you know, all across Boston and actively expanding that work. So we’ve been spending a lot of time in New York. And we’ve also backed, backed teams out on the West Coast too.

Nick: Got it. So you’re based in New York, but a lot of the focus of #Rough Draft is in the greater Boston area?

Peter: Yeah. I’m in, I’m in Boston, I  spend

Nick: oh you’re in Boston

Peter: I know, sorry. So I, I’m always in like a super position upstate. So, I’m in Boston every Monday, Tuesday, and then I’m in New York the rest of the week. And then I’m kind of wherever I need to be. whether it’s out on the West Coast or on weekends for events and things like that. So,

Nick: Wow

Peter: I spend time with both

Nick: Well get to Chicago sometime. I’d, I’d love to pick your brain on this and hopefully we can do something similar at some point in the Midwest

Peter: The best, yeah. Yeah I was in Chicago this past weekend, and I am very actively thinking about the role #Rough Draft can play at great universities there.

Nick: Awesome. So these student focused funds aren’t new. But they are growing at a fast rate. And #PitchBook found that as of 2016 there were 44 college focused funds and investor groups, many of which were new. Why do you think we’re seeing this growth, #Peter?

Peter: Yeah, absolutely. Look I think it’s, it’s insanely encouraging and exciting to me that more and more folks are kind of, you know, allocating resources and capital and focusing attention to what young people can do. I think it’s a few things. So I think, you know, number one, a lot of the excitement around the outlier success of some of these companies that have come out of universities, I think it’s very, very attractive and exciting. And I think that kind of inspires the next wave of entrepreneurs to pursue the same things. So I think funds are paying attention to that. I think the second piece is really the, the amazing developments around university infrastructure, right. So you have more and more universities, you know, whether it be at Stanford or you know at Cornell, you have many, many universities that are, that are, are, are allocating, you know, more support classes, space for company creation to happen. So when you can have classes on campuses where basically the, the final project is to come up with a startup, there is great stuff that’s bound to come out of that. And if the university is providing a space for those companies can work and, you know, you just, you’re going to see a lot more kind of enthusiasm and acceleration now that universities are also doing even more to encourage it. So I think that’s the second piece. And I think the third part is a lot of alumni networks have historically been angel investors and kind of found adhoc ways to support great young entrepreneurs that are coming out of the, those alma maters. I think more of them are now coming together joining forces to be either angel groups or you know kind of focused investment funds to really kind of, you know, create an even more focused effort around it. And so that kind of activity from the alumni and the interest in kind of it’s almost like a pay it forward kind of model, where it’s, you have amazing entrepreneurs that got so much support from their universities and, you know, they found their co-founder in their roommate, you know, their professor was their first advisor. You know, those entrepreneurs started their companies call it five, ten, fifteen years ago. Now they’re in a position to kind of give more time back. And often times in, in the form of capital. So I’m, I’m really excited about that.

Nick: #Peter, are you familiar with #First Round’s dorm room fund? And if so

Peter: Yeah

Nick: Yeah. And if so, what are your thoughts on what they’re doing and also how is it similar or different than

Peter: Yeah

Nick: #Rough Draft?

Peter: Absolutely, yeah. So we launched within a few weeks of each other. I’m

Nick: Really?

Peter: Yeah. I’m a huge fan of #First Round and all the work that they do. And definitely, you know, we are kind of brothers and sisters in arms. I

Nick: Sure

Peter: think and, you know, really helping kind of open up this opportunity. And so we’ve done a number of co-investments together which I’m really excited about. And so if student teams need a little bit more access to capital, we can kind of come together and provide those teams, you know, forty, fifty thousand dollars to help them get their startup, you know, team that could be graduating, and they’re rapidly scaling. So we’re really excited about that. We do a number of events together. So I’m like always about, I’m kind of, you know, inviting in the members of their student team into a lot of our activity. And so I view us as totally shared ethos and kind of and perspective on just how huge of an opportunity this is. And I, I love the work that they do. And so, I’m excited that I think a lot more folks are going to kind of join us in, in spending time with great young entrepreneurs on college campuses and helping them build companies.

Nick: From what you’ve experienced, is their process similar to yours? Or are they sort of employing a, a different way of executing this, maybe you know, is it like a scout program? Are they

Peter: No, so they’ve got a very similar model, yeah, which

Nick: Okay

Peter: is great. You know, I think the, you know, some of the things that they do exceptionally well. I mean, the, the content that they create is just, is amazing. And I think that they’re doing a lot of, of educating around company building, around the opportunity, around the student narratives. And so that’s something that I’m really inspired by and I really look up to. You know, they also, they have a, a good amount of activity out on the West Coast too, where we’ve been pretty laser focused here on the East Coast. And so it’s been exciting just to see a lot of the work they’ve done out there, which we’re starting to explore. But they’ve, they’ve managed to kind of, you know, make that a, a part of their focus early on. But yeah, no, we’re, we’re super, we’re super, super, super similar. Specially in our interests in being very entrepreneur friendly and being very kind of, you know, simple, transparent and being really great, great kind of additions to the, the student community.

Nick: So it sounds like you’ve got some, some leaders and some, and some ambassadors on campus that are helping you push this forward. How do you identify them and, and sort of get them engaged in, in the whole process?

Peter: Yeah. So this is my favorite part, #Nick. I’m going through this right now. This is like my absolute favorite is recruiting the student team. It’s an opportunity for us to find the best engineers, the best student leaders, folks that are you know, I’m always looking for the folks that are basically already engaged in, in, in helping give back to their, their community. They are the ones that are organizing the Hackathons. They are often times working on a startup. They’ve probably worked in startups or maybe even worked in venture. And so my favorite thing is to find these students because #Rough Draft then acts as a way to kind of almost like amplify stuff that they’re already doing, just doing it in a much bigger way on their campus. And so every year I get to spend two months just meeting tons and tons and tons of amazing students. And then we, we make a decision and we choose, you know, one to two students for a handful of universities. And what’s great is, you know, these, we’re also starting to see where these folks end up going after #Rough Draft, right. So now that, you know, we’ve been running the program now for, for the past few years, now we kind of see, you know, what folks kind of graduate on to do from #Rough Draft. And, you know, they go and they join venture firms, they’ll, you know, they’ll join a box group, or they’ll join startups. So we’ve got folks that are working at #Snapchat, working at #Instagram. And so it’s really awesome to see that, you know, their, their, their authenticity and kind of dedication to technology and, and, and being also members of the community. Something that we really look forward to. And, you know, a big part of what we do with #Rough Draft is to, to basically find those folks and give them even more resources to help build up the ecosystems on other campuses. 

Nick: That’s awesome. This sounds like quite a ride.

Peter: Oh it’s the best. It’s the best

Nick: So while we’re talking about students, have you found that students are ready to be CEOs or are they requiring, you know, additional help, coaching, co-founders with more experience, you know, how have you found that?

Peter: Yeah. Well, I think we, the, the needs of a student entrepreneur bear some similarities to, to, you know, entrepreneurs that are further along in their career. I mean, in some ways it’s different. I think a number of, of students are, are, are ready to become CEOs. You know, they are, they are often leaders in their own ways and, and the work that they’ve done whether it’s on campus or in summer internships or even in high school. And so I think that there are a number of these founders that we’re going to see emerge earlier and earlier on, right? Like I think we’re going to see more and more, you know, freshmen and sophomores building companies and, and creating teams, because they’re able to get, you know, internships earlier and earlier and work on side projects earlier and earlier. You know, a few of the CEOs I could, I had the privilege of working with, one of the teams that we’ve backed very early on with #Rough Draft is a company called #Mark 43. And the founder #Scott Crouch is a classmate of mine, a great friend of mine. And he has, you know, led his company from 3 people and an idea coming out of a class project to now 55 people based in New York. They’ve raised $40 million and they’re building really, really amazing software to, to empower the, the police department and give them, you know, software and tools to do their jobs. And if you would ask #Scott in that moment back at senior year, you know, are you ready to be a CEO, it’d be maybe not. But, you know, I think with resources I think finding mentors and advisors early on can play a huge, huge, huge role. But I also just think that the leadership and product talent are two kind of aspects and elements that I think students are able to access and cultivate earlier and earlier. And so I think we’re going to see a lot more CEOs come out of universities.

Nick: You know, we had #Charles Hudson on the program of #Precursor and #SoftTech. And I think he said his single biggest regret is not backing every one of his fellow students at Stanford because they’ve gone on to, you know, great startup successes and I thought that was interesting.

Peter: oh I, I think , you know, I am, I am a 100% on that page. I, I’ve got to tell you the, the opportunity to, to support folks that you’ve known, that you’ve kind of seen, really kind of grow and evolve and be leaders in their own ways. I mean, I think this is one of the things I’m, I, you know, I was so excited to, to do, you know, as a part of #Rough Draft as a student and also now, right. And so, now I get that opportunity to, to continue to do that. And I think giving more students the opportunity to, to basically back and, and support their smartest and most motivated peers I think is something that is, you know, super, super rewarding. And I think it leads to, to big opportunities.

Nick: So we’ve already kind of touched on this, but what are some of the biggest differences between your investment approach with the student fund and your approach with a non-student-run startup through I guess maybe the #General Catalyst model?

Peter: Yeah, so, you know, the, this topic that we just talked about is one that definitely is a common thread across. You know, I’ve been very lucky to, to have backed entrepreneurs that I went to school with on the #GC side. So I’ve worked with an amazing CEO #Ryan Williams who runs a company called #Cadre in our #GC portfolio. And this is a B2B marketplace for commercial real estate here in New York, which I’m super excited about. So that’s, that’s another instance where, you know, finding the, the best CEOs and founders in the world, whether they’re in your network or someone you get to know, I think is, is the common theme across #Rough Draft and across my work at #GC. I think another piece of it is the, you know, the ability to pull together teams and seeing that skill and that talent early on is something very important for early stage investing across the board. And so we pay close attention to it on the #Rough Draft front. So often times we, we look for folks that have been able to kind of bring together two or three folks on their team. There, the only thing more complicated than, you know, one student trying to balance school and a startup is that student convincing three or four other students to do the exact same thing. You know, with very limited budget, with parents to consider and internships that they’re turning down. And so, you know, the teams that are able to do that I think are really special. I think this is, you know, the same on, on the venture front. An amazing founder that’s able to pull together folks that are at their caliber if not higher very early on is, is something to always pay attention to. So I mean a lot of the, a lot of the traits are, are, are very, very similar. I think the biggest differences are probably centered around really the amount of, of kind of traction and the amount of metrics that, that these companies are often able to see early on. And so a lot of the, the work we do at #Rough Draft were the first investors were often the first presentations these companies have ever done. And they often haven’t even, you know, gotten incorporated yet. And so that’s a little bit different than kind of like the seed in Series A companies we, you know, we spend time with, with #GC. And so I think there’s a, an element of, you know, you see more kind of chapters of the story written on the #GC front. And so you, we have a lot more to analyze and a lot of more to kind of build the investment thesis on outside of just the founders, outside of just the market opportunity, and outside of the, the early team, which is basically what we have to work with on the #Rough Draft front.

Nick: Got it. So, you know, in my personal school experience, I did a lot of coding in undergrad and then I went to business school. And I noticed for both of those experiences that a lot of the schools on campus were, were pretty siloed, including their students, you know. How do you think about bridging the gap between the cs school and maybe the business school and the engineering schools and many of the other schools to get, you know, the right combination of folks working together?