First Round Capital’s student operated Dorm Room Fund recently invested $20,000 in Prayas Analytics, the Pennsylvania startup that does analytics for brick-and-mortar stores, TechCrunch reported.
The Dorm Room Fund is a student-run venture firm that invests in student-run companies. The team of students believes that a relatively small amount of capital can help student founders take their ideas from the dorm room to the market.
For companies applying for funds, at least one founding team member must be a full-time student (undergraduate or graduate). Average investment size is $15,000 – $20,000 on a founder-friendly uncapped convertible note.
First Round Capital is an early stage venture firm that has backed companies like Fab, Path, One Kings Lane, and Uber. It created Dorm Room Fund with the purpose of giving a handful of students $500,000 and asking them to invest in their peers’ startups. The students will be investing about $20,000 in each startup over the next two years. When they graduate, they’ll find new students to replace them.
The first Dorm Room Fund group began in Pennsylvania. Hundreds of students applied to be part of the investment team. But First Round Capital eventually selected 11 students from Drexel and the University of Pennsylvania to serve as the board for the new fund. Two months later, the board of students settled on their first investment: $20,000 to Firefly, a company started by four University of Pennsylvania students, which creates screen-sharing software.
Today, the Dorm Room Fund has student investment teams based in New York City, San Francisco Bay Area, Philadelphia, and Boston. Dorm Room Fund’s student investors come from diverse backgrounds in entrepreneurship, investing, and curriculum majors. The Dorm Room Fund’s portfolio includes about 22 companies.
“If students are smart enough, capable enough and motivated enough to start companies, there’s no reason they aren’t smart, capable and motivated enough to invest in companies,” Phin Barnes, partner at First Round Capital, told Mashable in an interview.
The Dorm Room Fund, however, provides more than money, it also provides resources and mentorship, which are as important in launching a startup as seed capital, if not more, according to its Website. Resources include discounts and partnerships with premier service providers, public relations, mentoring from RAs (a community of professional advisors), special events, and access to a national network of other student entrepreneurs.