Students Backing Students: The Rise of the Dorm Room Venture Capitalist

Dorm Room VCs

Like many of today’s most successful companies—Facebook, Microsoft, Google, and WordPress, to name a few—Rough Draft Ventures (RDV) was founded at a college.

But, for Rough Draft, college is more than just the place where the idea was born; campuses are where the idea thrives.

RDV is a team of students backing fellow students at the earliest stages of their ventures: the “rough draft,” so to speak. This peers-funding-peers model gives young entrepreneurs access to equity-free capital and resources, and gives students access to learning about the VC industry. Above all, it encourages entrepreneurship and creates a community of student founders that have gone on to launch successful ventures after graduation.

The Idea

For Rough Draft’s co-founder Peter Boyce II, it began at Harvard.

Boyce helped create HackHarvard, the university’s first on-campus accelerator program. Though HackHarvard succeeded at bringing student teams together, Boyce noticed there was something missing. “Students didn’t have access to advisors, mentors, or capital to work on their ideas,” he said. “I thought, how do I create connectivity between investors, CEOs, and student entrepreneurs?”

That thought dovetailed into the creation of Rough Draft Ventures during Boyce’s senior year. Backed by General Catalyst, RDV provides student entrepreneurs with funding of up to $25,000 to work on their ventures and has funded more than 100 startups to date. Beyond the capital, Rough Draft offers a network of support and connectivity that Boyce believes is crucial for first-time and early-stage founders.

Starting at the foundation, Rough Draft provides portfolio companies with early legal and financial support and connections to the fund’s full suite of partners, including HubSpot, WeWork, and Silicon Valley Bank. These resources and partnerships enable teams to accomplish more without having to spend additional capital. Founders also can connect with Rough Draft’s impressive array of mentors to chat fundraising, press, and product launches. And, if advice is needed, Boyce’s team can help make the connection.

Most importantly, said Boyce, Rough Draft creates a community. “Peer connectivity is essential,” he said. “Providing it across multiple campuses is a special opportunity for us.”

Rough Draft’s portfolio founders stay connected via a slack group, sharing best practices, advice, and opportunities with one another. When not busy building a company and being full-time college students, founders gather for breakfasts and community events, where they hear from special guests, local founders, and investors. It’s all about facilitating the connections that make venture success—now and in the future—possible.

And, Rough Draft’s formula for support and success works. LovePop appeared on “Shark Tank.” Mark43, one of the first companies RDV backed, has a team of more than 80 people and raised more than $40 million in capital.

The Student Investors

Rough Draft’s portfolio is full of success stories like those of LovePop and Mark43. Success that started with discovery and funding, thanks to Rough Draft’s team of students in Boston and NYC.

“The student team we bring together is the core of our program,” said Boyce. “They are the ones finding peers to support with capital and mentorship. They are forging and creating our community.”

Student team members listen to pitches—companies apply to pitch through Rough Draft’s website—at weekly Monday meetings during the academic year. While listening, they’re evaluating factors such as market share and pricing models. Student team members decide whether to award funding based not only on the idea, but also how the company fits into RDV’s portfolio, and how it would benefit from the resources and mentorship the fund provides.

To recruit the right team of student investors ready to make such tough decisions, Boyce looks for three things. First: leadership experience. “I’m looking for folks that help at hackathons, run student entrepreneurship programs,” he said. “It’s mission critical to have a team of students supporting and empowering their peers and their campus community.”

Startup experience helps, too. Understanding the startup community means student investors are empathetic, and have a set of experiences they are excited to share with others. Finally, Boyce is looking for diversity in his investors—diversity of experience, background, education, and focus. This year’s Boston and New York City teams are stacked with investors from 10 colleges earning undergraduate or advanced degrees in computer science, marketing, even biomedical engineering. More than one-third of the team is female.

Intentionally missing from the list of qualities that make a good student investor? Prior venture capital experience. “Most folks have so few opportunities to gain VC experience as students,” said Boyce. “We’re excited to enable that experience.”

Derek Tu, a junior at Babson College and member of RDV’s Boston student team, echoes that sentiment. “I know I’d one day like to be a VC after working at a tech company or building my own startup(s) first,” said Tu. “RDV is the perfect chance to get my feet wet.”

Getting his feet wet includes getting practical experience that supplements his college classes. Yes, Tu is learning about sourcing teams, evaluating business models and making investment decisions in class, but with RDV, he’s actually doing those things. The student becomes the practitioner.

Boyce believes giving a diverse group of students experience as VCs will have substantial downstream impact, too. It’s no secret the venture capital industry could be more diverse. In 2014, Babson College’s Diana Project research found that only 6 percent of partners in VC firms were women. In 2015, The Information and Social Capital found that less than 1 percent of senior VCs involved in investment decisions were black and only 1.33 percent were Hispanic.

The RDV team reflects the diversity that is missing in the industry, and for Boyce, that’s exciting. “When we look at the Rough Draft Ventures team, we see what the future of VC can look like,” he said. “These are the students that can reshape our industry.”

Looking Ahead

Having established student teams and founder networks in both Boston and New York, the Rough Draft team is brewing up new ideas that continue to empower young founders—even those who haven’t developed an idea yet.

“We asked ourselves, ‘How do we help students that aren’t ready to start a company, and give them the skills they need to start one down the road?’” said Boyce. “That’s where the academy comes into play.”

Launched in December 2016, the RDV Academy is a chance for sophomores and juniors to spend the summer working at high-growth startups in Boston and New York. Academy students will strengthen their software skills and experience firsthand what it’s like to scale a company. “If we succeed, down the road we’ll see more students take up the mantle of starting a company. It’s a long-term investment for us.”

A long-term investment the company is willing to make as it continues to build its portfolio, and, as a result, the tools, resources, and connections available to those founders. “We are still in the early days of our work, and we’re only beginning.”

Posted in Entrepreneurial Leadership

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