Student Entrepreneurship vs Entrepreneurship
We spend a lot of time on campuses across North America building relationships with students and student entrepreneurship programs. One of the most frequent questions we are asked is about what young entrepreneurs need that differs from their more senior peers.
There are definitely differences, but the place I see the most differences are in teams that have been guided through university programs (this includes professors taking IP out of universities, so it’s not just about age) versus through other startup processes and hence through the market (customer feedback, good accelerators, angel investors, etc.).
We have been working with a university that is focused on bettering their programming for students and offered the following feedback. Upon writing it, I realized that it’s highly applicable to student entrepreneurs in general or those breaking tech out of universities.
~~
I thought it might be helpful to offer some high level general feedback, since we see these kinds of issues a lot with student teams and first time founders. Most everything below are critiques that we give to students quite regularly, so this isn’t specific to them so much as it’s a common trend.
Re: NDAs
I asked the founder about where they were at with building their product and he went into a spiel about needing to sign an NDA. I reminded him that I wasn’t asking him to share any special sauce, just where they are in developing their product (do they have a prototype?).
Generally early investors don’t sign NDAs since it just doesn’t make a ton of sense. I always tell students that it’s up to them to figure out how much they want to disclose and if someone is surfing into the deeper scientific discoveries in deep diligence than maybe it makes sense at that point to talk about NDAs but not typically before then.
Re: Customer Discovery
We’ve seen this with a lot of science/engineering heavy teams where they love to geek out on what they are building before they know who or what they are building it for. Sometimes burning a lot of precious time or money building something that it turns out that no one wants.
I urged the founder to set goals for his team to go into X number of facilities a week to talk about their product to get a better sense for if it would be of use. I told the founder that I would love for them to focus on this over the next few weeks and get back to me with their results/learnings and talk to the whole team. Often this is the area that teams avoid the most because it’s the most uncomfortable to do or they have a false notion that a sales team member will do this later on after the product is built.
Even at that stage, we find that sales team members might help to find leads but for the first couple of years, it’s the founder closing the deals (in part because having both passion and expertise for the product makes for a great sale).
Re: Student Competitions vs the Market
The founder mentioned being in a lot of student competitions. This is great for some early funding but can also skew the direction of the team because they are getting positive signals from a competition and therefore think that those signals will also be replicated in the market (we’ve also seen teams get lots of positive traction in competitions only to be let down when customers or investors don’t see a place for the product in the market, no matter how important or potentially impactful it could be, inevitably leading the company to shut down).
I told him to think about student competitions as a way to bring in resources but to know that it is vastly different than if he’s out there talking to customers which should be their number one focus — and after talking to customers and building toward a pilot with them, to then start talking to investors. Thinking that going through a student competition is the same as going to the market would be a bit like thinking that my time doing speech and debate in college made me ready for the court room. There are definite building blocks but they are just different playing fields.
Side note: I think speech and debate (LD all the way!) is one of the most useful skills out there and is one of the few things I use on a nearly daily basis as an investor.
Re: Patents
The founder mentioned working on their first provisional patent. One way we like to think about IP is that it’s for defending one’s territory once the territory has been defined. I’d hate for them to spend the money on a patent, and then figure out that they aren’t going to go to market with that piece.
Again, more customer discovery is really needed here. In our view, a patent is great for Series A and beyond to show ones novel IP, but as Michael on our team says “you’re not rich enough for justice.” If someone infringes on something when you’re a company getting off the ground.
Either way, I’d love to see them focus more on figuring out what they should build by talking to who would be a potential user/buyer.
Danielle
