There’s no shortage of college student who have startup ideas and want to turn their entrepreneurial dreams into a reality. But getting the money, even if it is a few hundred dollars to set up servers, isn’t easy for college students. First Round Capital recently debuted its Dorm Room Fund to help back ideas started by students in the Philadelphia area. NEA has also started a similar fund at Harvard. And today, General Catalyst is debuting its version of the service, Roughdraft.VC, to fund students at universities in Boston.
Roughdraft wants to invest at the earliest stage in student startups to help them in their journey from rough drafts to products in markets. Similar to the Dorm Room Fund, it’s actually a student-run partnership. Seven students from Harvard, Tufts, MIT, Boston University and Babson choose what ideas to fund, and General Catalyst is not involved in the day-to-day decisions.
Peter Boyce, a student at Harvard who is running Roughdraft.VC on the student side, says that the next big company will be started with as little as $5,000. But students don’t know where to go to find that money. And as General Catalyst’s Bilal Zuberi explains, Boston students have gone onto create amazing companies, like Facebook, Dropbox, Hubspot, Stripe and many others. There’s an enormous amount of talent in the area, and the firm wants to be a resource for students who want to turn their ideas into products.
The criteria to be funded is fairly simple. Founders have to be students in the Greater Boston area. The amount can range from a few hundred dollars to up to $20,000. Roughdraft will make around 10 to 20 investments per year. The team will evaluate submissions and fund ideas based on the idea and dedication of the student. For now, the focus is on software and hardware startups.
In terms of the actual transaction, the funding is in the form of a simple convertible loan (with no discount or cap), and the fund makes it clear that it is making only initial and no follow-on investments. If the idea dissolves or doesn’t pan out, then there is no obligation to return the money, says Zuberi.
Clearly, this idea is catching on as more and more VC firms are helping students find capital to get their ideas off the ground. Not only is it a great way to actually find interesting ideas, but even if these ideas don’t end up turning into products, it’s a good way to keep an eye on promising talent. I’m fairly certain we’ll see these types of funds emerge in every major city where there is a number of universities.