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Take Notes: Fundraising as a Student

Sumukh Setty '21 and Ryan Laverty '20 share their experiences and expertise when it comes to startup fundraising.

Last Wednesday, eTower residents Sumukh Setty '21 and Ryan Laverty '20 hosted an informative workshop for our community about fundraising as a college student. These student entrepreneurs have unique perspectives when it comes to raising funds. Sumukh is currently a venture fellow with Rough Draft Ventures (General Catalyst’s student arm) and was formerly a venture partner for Contrary Capital, a university focused venture capital fund investing in startups touching colleges. He spoke from a venture capitalist’s perspective, while Ryan offered the entrepreneur’s perspective based on his experience successfully completing a raise this fall which closed over $250,000 following his venture Arist’s appearance on the ePitch stage.

They began the workshop by writing down a list of the things the audience wanted to know, and went in order of what were the most essential for them to know.

Here are some of the key takeaways:

  • Advisers: Ryan says that he has found that, “the sweet spot for advisers is the intersection of highly knowledgeable and recently retired." A growing entrepreneur should be aware that they should clarify expectations when it comes to advisers, and keep in mind that they can fire an investor just like you can fire an employee - they need to be providing value, and that will look different for each business and each adviser. 
  • Some of the risks you should try to mitigate for investors: Ryan listed some of the major risks you should address when trying to obtain funding. These include:
    • Technical risk: can it actually be done?
    • Product: can the product work/get feedback (prototype, mock-ups, etc) 
    • Team: can you recruit founders and co-founders 
    • Market: is there a market for this? 
    • Financial: is it financially feasible?
    • Systems: can you put the systems in place to scale 
    • Execution: have you hit the milestones you’ve wanted to hit 
  • How do you know when you're ready to start fundraising? 
    • What happens if you're not ready? “If you’re not ready, you’ll either get money and no help, or terrible terms” - Ryan 
    • Don't be afraid to bootstrap it for a bit. While you're in college, you have a safety net that you can take advantage of. As Sumukh put it, “investors are looking for resourcefulness before they give you money," so take time and do your due diligence before going out to raise. 
    • Before you start raising, make sure you establish credibility. Credibility is really important for investors -- this is where advisers can be really key. 
    • You need to have built a repeatable model -- demonstrate that people want it, they’ll buy more, and that your company will be able to get the next milestone with a little more capital. 
    • Be clear about how much you’re raising what you’re money is going toward -- Venture Capitalists will grill you about these things. 
    • Be able to validate the assumptions you’re making about your product and demonstrate that to your potential investors. 
  • How can you take advantage of Babson resources while growing your business? 
    • Connect with the Entrepreneurs in Residence (EIR) at Babson -- they have SO many connections
    • Utilize the Blank Center and their programs, like the Summer Venture Program and BETA Challenge. 
    • Utilize course professors. Sumukh notes  that his “relationships with professors have sometimes been more important to [him] than the courses themselves." -- powerful! 
  • How do you manage your time as an entrepreneur growing a business? 
    • Sumukh notes that it's important to optimize your time and energy for what you’re interested in. Of course, do what you need to do to pass and keep the GPA you need to for scholarships, etc., but try to find ways to spend more time on what you care about and be super efficient at the things you don't care as much. 
    • Ryan explained how important it is to take inventory as to what times of day you work well - if you work well during the early morning or late night, make sure you are working on important things during those times. 
    • Tip: Write out a list of your priorities in life and compare that against your Google Calendar. Are your priorities reflected in how you're spending your time? 
  • What are some of the common mistakes student entrepreneurs make when fundraising? 
    • Not understanding term sheets
    • Not understanding redemption rights
    • Not understanding pay to play 
    • Not taking the time to do that market research, prototyping, etc. 
This is just some of the amazing advice we learned from two of our resident experts in fundraising. Fundraising can be intimidating for anyone, and especially as a young founder. You can have great ideas, but there are certain things you need to set up and put work into if you want to have a successful funding round. And, it's important to note that fundraising isn't necessary or best for all businesses. Do some research into similar businesses in your industry and how they started out. How did they fund their initiatives? Are there any creative ways you can bootstrap to continue for a few years before exploring other options?
Thanks again to Ryan and Sumukh for sharing their knowledge, and shout out to the Weissman Foundry for hosting this event!
Best of luck in your ventures,

Alicia Sibole

VP of Web Development

eTower Resident

CEO and Founder, Alicia's Life Tips

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