First Round Capital has made a big bet on students sourcing and making investments at colleges around the U.S. with its Dorm Room Fund. the idea behind the Dorm Room Fund is that if students are motivated enough and smart enough to start a company while in college, then they are capable to run a venture fund, and back the next big ideas. First Round originally launched the fund in Philadelphia and expanded the initiative to New York and San Francisco (and soon Boston). Today, the Dorm Room Fund has made 20 investments in startups, and the firm is announcing the addition of 60-plus mentors.
For background, each city;s fund is around $500,000. Students from colleges in the city apply to be part of the investment team, and then the chosen students source investments and make decisions unilaterally to invest in startup ideas. As students graduate, more will be added. On average each investment is around $20,000, and is structured as an uncapped-convertible note.
First Round signs off on every investment and is available to the student group to consult on questions, but this is largely run by the students. Each group goes through training to better understand investment philosophies and scout out interesting ideas and businesses independently. Any carry made by the investment (i.e. if the startup is acquired) is put back into the universities.
Over 60 entrepreneurs, including Dennis Crowley, Cyrus Massoumi, Kevin Hartz, the Warby Parker founders, Charlie Cheever and others have joined the initiative as “Dorm Room Fund RAs.” These mentors work with Dorm Room Fund portfolio companies. These RAs are also all alums from the same universities that the firm’s current Dorm Room Fund student investors attend.
Some of the investments include Databetes, A&B American Style, Radiator Labs, Skillbridge and others. It’s still early days to figure out whether these investments will lead to lasting companies and technologies. But as we’ve said in the past, part of the Dorm Room Fund’s purpose is to also prospect promising talent at the college and graduate levels in these technology hubs. If anything, First Round is expanding its network of talent.