Start-Up Fund Run by Students, Financing Student’s Ideas, Launching in NYC
By Zachary Stieber On February 25, 2013 @ 1:29 pm In New York City | No Comments
NEW YORK—A unique venture capital fund that focuses on financing business concepts from students is expanding into the city.
First Round Capital launched the Dorm Room Fund last year in Philadelphia with $500,000 and a team of students choosing which start-ups to finance.
Veteran Internet industry entrepreneur Josh Kopelman is managing director of the company. He wrote on his blog that he co-founded his first company back in 1992 while he was still in college, and that many of the largest tech companies in the world—Facebook, Dell, and Google—were also born in a college dorm.
Yet today’s economy typically forces students to take out loans, and it’s difficult for students to raise funds early on in a business venture from the traditional set—friends and families.
“We’ve heard from several entrepreneurs claiming that it was ‘much harder to raise our first $25,000 then our next $2 million,’” wrote Kopelman. “Given this, I just wonder how many amazing companies we would be talking about today had they received that first small check. Instead, I hear stories about how amazing students, under the giant burden of college debt, abandoned their startup dreams and chose to take full-time positions at established companies.”
The fund did so well in Philadelphia that First Round Capital has decided to expand into New York City, with the same model—$500,000 broken into single investments of $10,000 to $20,000.
“We feel like we’ve validated that a student-run venture fund is a good idea and now we are taking it national,” Phin Barnes, a partner at First Round Capital, told Mashable. New York City was picked for its “high density” of college campuses, and the plan is to launch in at least one more city by the end of the year.
Students from Columbia University, New York University, Princeton University, and Cornell University’s new tech campus can apply to be part of the fund, meaning they help decide which student-run start-ups to finance.
“If we believe and know that students are smart enough and motivated enough to run companies while at school, why wouldn’t they be smart enough to run a venture fund as a startup?” Barnes said, according to Forbes.
Five investments in Philadelphia so far have included the customer service startup Firefly—which offers download-free screen sharing across any device—co-founded by three students from the University of Pennsylvania and the university’s Wharton School.
A pair of students won a New York City competition last year for their business concept of putting mini-vending machines in taxis, though the idea hasn’t manifested yet.
Students interested in becoming involved with the Dorm Room Fund can sign up here.
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