Last year was pretty momentous for Rough Draft Ventures - the VC fund that backs student-founded startups across the country. Not only did the organization expand its Boston reach by adding more student team members from local schools and see success from its portfolio companies, but it also picked up on some shifts within the college startup community.
According to Rough Draft Ventures, it added 10 new team members, all of whom are students and who represent Boston schools, including MIT, Harvard, Tufts, Olin, Babson, HBS and Sloan. Also, it met with more than 300 student founders, had 50 of them pitch during its Monday night meetings and backed 16 of their startups this past year.
How student startups became more sophisticated
As you can imagine, with that much face-time with local student entrepreneurs, Rough Draft Ventures has a solid pulse on how the university venture realm is evolving. And, in 2015, that means more mature startups marked by more resources.
“Every year we’ve seen teams that have been more and more sophisticated by the time we have conversations with them and they start percolating,” Peter Boyce, co-founder of Rough Draft Ventures, said. “I think that it’s a function of a lot these teams having more resources and a lot of them having prior experience in startups.”
In terms of trends in student startup-dom that Boyce noticed last year, he explained that one of the most significant patterns appears to be academic diversity:
We’re seeing teams that are working with graduate students. There are more teams of undergrads and grads coming together to collaborate, so you’ll have an undergrad and a PhD or you’ll see 2 PhDs and an undergrad. We’re coming across a lot more of those teams because, number one, in Boston you have more places where they can connect with each other. I think, number two, they can be really complementary to each other. So that’s something we’ve been really excited about and encouraged by - just being able to support them.
Why there's more money for on-campus companies
Additionally, 2015 appears to have brought more capital to student startups - and not just from Rough Draft Ventures. Campus-grown companies seem to be gaining more traction at a faster rate, making them appealing investments to general VCs.
According to Boyce, “The velocity at which startups have been getting follow-up funding - Seed of Series A - has been really encouraging. We’ve been able to work with them as early supporters and in a couple of months, it’s great to see that they’re able to raise more capital.”
That trend can be tangibly seen by the fact that 10 of its portfolio companies raised funding rounds last year amounting to more than $35 million. Among those startups were Rebagg, Instabase and Freebird - which raised $4 million, $3.75 million and $3.5 million in seed money, respectively.
What’s getting student startups ready for larger, more significant VC funding? It actually might be the universities themselves. With more schools picking up on the benefits of dedicating resources to student entrepreneurs, the better off prepared on-campus startups are. Boyce elaborated:
It’s the magic of being on a campus, having your housing figured out for you and just creating a company while you’re a student...It’s essential to the university ecosystem, and universities are coming up with more support to encourage this. There’s more capital available on campus, more spaces to get together with your team, more classes where you can get credit for working on a startup, so it’s no longer this crazy sacrifice that you had to make: You had to drop out of school, raise a million dollars, get 0s in all your classes. Now, you get course credit, you get to hang out with other students running companies, you can talk to your professors who can be mentors. It’s much more supportive and welcoming.
Not to mention, with no real-life problems for students to worry about, they’re more likely to try wild and risky ideas. If a venture has promise, it has the resources needed to scale at its disposal. And if it doesn’t, a student can shut it down with no harm, no foul and move on to the next idea.
What's on tap for 2016
Now a month into 2016, Boyce said Rough Draft Ventures has reflected on its New Year game plan and is ready to execute. For the most part, the organization hopes to be continuously involved with its portfolio companies, providing support however it can. But it also wants to keep moving, becoming more active and engaged on new campuses across Boston, such as Brandeis and UMass.
“We’re going to keep looking for student founders with crisp vision and who want to be part of a community like ours,” Boyce expressed. “We want to see thoughtfulness in terms of what they’re doing, not just because they read an article in class on entrepreneurship and wanted to give it a shot. There has to be some thoughtfulness that drives them to do what they’re doing.”
Images on file.
