Missed Opportunities: VCs Role in the Growing Supply of Student Start-Ups

It should be hardly surprising that you find me criticizing about the lack of support for the growing trend of college entrepreneurship if you've read my previous post, The Grey Entrepreneur. There are going to be seismic social changes which will be great opportunity with the increasing supply of student entrepreneurs in the market.

Education is far too archaic and bureaucratic to make the paradigm changes necessary. And this is coming from a student attending Babson College, the number one ‘ranked’ school for entrepreneurship. As good as they are, the Y-Combinator’s ,TechStars  and DreamIt Ventures  aren’t big enough to cover or assist the growing number of young, first-time entrepreneurs. [Here's a directory of other start-up incubators.]

I wasn't surprised at the high volume of students that attended last Thursday’s What’s Next in Tech event at Boston University, However, I was a bit disappointed by a lack of effort from Michael Greeley from Flybridge Capital Partners, Bijan Sabat from Spark Capital and Neil Sequiera from General Catalyst to reach out to the student entrepreneurs in audience. Although there is a lot of focus and support for competitions such as the MIT $100, the Boston College Venture Competiton, and others, I question whether they are truly investigating the larger population of student entrepreneurs.

The panel was led by leaders of some of the coolest companies on this side of the country; the likes of Mike Dornbrook, COO at Harmonix Music (makers of Rockband and Guitar Hero), Helen Greiner, co-founder of iRobot, and founder of Droid Works, and Brian Halligan, CEO of HubSpot. The event was split into two panel discussions with venture capitalists on the first and entrepreneurs on the second. Both were led by Scott Kirsner, a prominent tech journalist in Boston who leads many similar type events.

Due credit should be paid to Michael Greeley for his criticism of venture capital and how the industry can be hardly transformational. They have fiduciary responsibilities and due to increasing number of VCs hunting for the same investments, there is definitely a strong investment style of herding. Which lead to my question, what are the VCs, Flybridge, Spark and General Catalyst doing to open themselves up to a growing supply of start-ups coming from students? In anticipation of some great new programs, similarly to the recent inaction, I was sorely disappointed with the response.

Flybridge is offering student free admission to their sponsored networking events, that are as frequent as them actually funding students. Spark carved out this $250k investment allocation a few months ago. Is that really that innovative? Well no, because Charles River Ventures started their Quick Start program back in November 2006. Regardless, how does this help engage students?

It was left up to the entrepreneurs to engage and connect with the students in the audience. Mike Dornbrook said that he is very excited about being an angel investor, and interested in mentoring students who have great ideas, but lack the experience. Helen Greiner encouraged starting straight out of school, when personal obligations and responsibilities are the lowest. Small amounts of funding, mentoring and support, they get it, why don't the VCs?

Neil beamed with pride when he spoke of the great work Chris Hughes was doing, of course not actually mentioning any of the work Chris Hughes was actually doing. It smacked of this East Coast sentiment that the VCs didn’t want to actually deal with ‘these students’, so we’ll hire some poster boy whose had a couple of great hits, can be branded as inspiration, and he’ll ‘get these students’. Brian Halligan cited the contrast to the West Coast. He told of his experience with VCs on the West Coast who were doing everything possible to connect with students, because when you crunched the numbers, the ROI of investments into student entrepreneurs was a lot higher than the mean. Anecdotally, he even mentioned one of his former VC colleagues going to the length of going from a two-piece suit to a graphic tee and ripped jeans. The East Coast prejudice toward student entrepreneurs, really isn’t helping build confidence among student entrepreneurs, and it isn’t even really in line with the VCs capitalist intentions. So who is really missing out? Everyone it seems.

There are more ways that venture capitalist can help student entrepreneurs. Here's a few suggestions:

1. Spend the time to go and speak with students. Jon Karlen of Flybridge came to speak at Babson, and it was a really engaging, informative talk.

2. At least fain interest when interacting with students, and leave the seat on the high-horse to the equestrians. For good and bad reasons, students will quickly develop disdain for your firm.

3. If you're going to give the mandate to your associates to connect with student entrepreneurs, due it effectively by actually giving them the time to properly dig deep into entrepreneurship classes and organizations. 

4. Traditional reference into firm through contact, submit business plan, prepare slide deck and pitch, takes too long and too time consuming a process. Instead, they could host rocket pitch meetups at their offices every couple of months.

5. Assist smaller business plan competitions that are just getting off the ground.