Dorm Room Fund — Ask Us Anything

We mean it, literally anything 🤔

At DRF, we love spending our time answering questions about our fund and student entrepreneurship. Over the years, we’ve noticed that some questions tend to be repeated more than others. We’re seeding this Ask Us Anything (AUA) with some of these frequently answered questions, but we’d love to hear from you! Send us your questions (aua@drf.vc) and we’ll post them here.

The Basics

What is Dorm Room Fund?

Dorm Room Fund is a student-run venture fund that invests in the strongest community of entrepreneurial students.

In other words, we’re a venture fund run completely by students, which invests in startups founded by our peers.

Why do you exist?

We started back in 2012, when it was super hard for students to find support as entrepreneurs. Everyone had debt up to their ears to pay for tuition, and most incubators/accelerators required students to drop out before joining. Traditional VCs weren’t focused on funding students, and financing your new venture was a frustrating obstacle. It was clear to us that universities are the highest density of intelligent and innovative people on the planet, so we set out to create an organization that fosters and supports student founders and investors.

Who do you invest in?

We invest exclusively in companies started by students. This means at least one member of your founding team must be a current student. Other than that, we’re industry and sector agnostic, although we prefer your company to be powered by technology.

To get a sense of the kinds of companies we invest in, check out the Best of Dorm Room Fund publication. Our two most recent investments (as of March 2017) are TEQ Charging and Veho.

Who counts as a student?

Anyone from college freshmen to PhDs, and everything in between. Our team has undergrads from Penn, MEngs from MIT, PhDs from Berkeley, and JD/MBAs from NYU. So long as you’re enrolled in a full-time postsecondary degree, you’re good to go! New grads also qualify, provided you graduated less than six months ago.

Who have you invested in?

We’ve invested in over 100 startups, including a few you may have heard of! Companies like Bevspot, FiscalNote, Homesuite, and Lily all have their roots at DRF, and we couldn’t be more proud 🎉.

What do DRF companies go on to do?

We’re insanely pumped that our companies are out there taking the world by storm. DRF-backed startups routinely go on to join accelerators like YC and Techstars, with millions of follow-on capital from top venture firms like a16z, Bessemer, First Round, Khosla, and Sequoia.

What’s your relationship to First Round?

DRF is backed by First Round, which essentially means they’re our sole LP. The capital for our investments comes from them, and we are lucky enough to have amazingly insightful partners like Phin Barnes and Josh Kopelman as our mentors. We also have the privilege of working with the incredibly cool Rei Wang, who serves as Director of DRF. That being said, we’re an independent fund, and 100% of the operating and investment decisions are made by our student partners.

Investment Process

What’s the process like?

We pride ourselves on moving fast. The entire process, from application to wire transfer, takes around a month. Everything starts with an online application. After you fill this out, a DRF partner in your region will hit you up to find out more about you and your startup. We generally take two meetings: the first to get more familiar with your business, and the second to deep-dive into specific areas. Following these coffee chats, you may be invited to pitch to your local DRF team. After a pitch meeting, we try to get back to you within a couple days with our decision!

When should I start the process?

Most companies we see pitch are just past the MVP stage, where they’ve built out the initial version of their product, and have started acquiring users or customers. If you’re in the process of building and have some initial Letters of Intent, you’re also at a good place, but too much earlier and we’ll probably ask you to wait a bit before coming in.

If you’re working on “hard tech” or lab-based technology, your timeline looks very different, and we expect to see a lab prototype, with a plan for commercialization.

That being said, it’s never too early to reach out to your local DRF partner! We love meeting new people, and will be more than happy to help out at any stage 😊.

Why should I start the process?

Teams come to DRF for all sorts of reasons, the biggest being that they’re at the stage where our capital can make a big difference, and that they could use some advice on how to tackle their next set of problems. The money from our investment is often used to cover outstanding contract work, pay legal fees (particularly for new patents), or to hire a new employee.

What happens after I get funded?

Once we decide to fund you, we’ll immediately wire you your funds 🤑. Following that, we take the time to introduce you to our amazing community of students, entrepreneurs, mentors, and venture capitalists — the most valuable thing DRF has to offer.

What happens if I don’t get funded?

There’s still a lot we’d love to help out with if we don’t end up funding you. The goal of DRF partners around the country is to be the best resource available for student entrepreneurship, and we would be more than happy to walk you through ways we think you could improve your product, strategy, or pitch.

Can I pitch to DRF a second time?

Pitching a second time is always an option, but we require you to show us significant changes from the last time you pitched.

Investment Specifics

What stage do you invest in?

We typically try to be the first institutional money in. This means that we are often part of the “friends and family” or “pre-seed” round, right as companies are building out their MVP and gaining some initial traction. It’s ok if you’ve received some grants or other small investments, but if you’ve already closed a substantial round from traditional seed investors, we’re probably too early for you!

How much do you invest?

We have a standard cheque size of $20k, in the form of an uncapped convertible note. We will not invest more or less in your company.

What’s a convertible note?

A convertible note is a financial instrument for issuing debt that converts to equity once certain conditions are met. In our case, those conditions involve your company raising an equity round of a certain size. Some notes have discount rates (which allow the holders to buy in to your next round at a reduced valuation) and caps (a ceiling on the valuation of the company for the purposes of determining the conversion value of the note), but at DRF we have neither. Our money is about as founder-friendly as a note can get — it’s safer than a SAFE!

What are the terms of the note?

This is something we’d love to discuss privately. Be sure to bring it up with a DRF partner if you have questions!

When does the note convert?

The first time your company raises an equity round of financing that brings in at least $1M. The note converts at the valuation of that round.

Which locations do you invest in?

We have teams in Boston, NYC, San Francisco, and Philly, but we invest in student startups across the US and Canada!

Investment Team

Who’s on the team?

Our teams are comprised of about 10 investment partners in each of the four cities mentioned above, plus a national platform team to help tie everything together. We also have a very involved alumni community.

Our team members represent a wide sampling of the universities in their areas, and are a mix of undergrads and grads. Everyone on the team has an incredible background, but each partner has a unique and diverse story to tell. We have founders, professional investors, economists, bankers, engineers, hackers, marketers, philosophers, and just about anything else you can imagine. Check out more on our team here.

What do your partners do?

Our student partners have a wide variety of responsibilities! Every partner is responsible for sourcing companies from their school or area, meeting with founders and analyzing concerns with their companies, attending weekly pitch meetings, making final investment decisions, and providing support to our portfolio companies. In addition, our partners strive to have a strong presence on their campuses, often running entrepreneurship clubs and organizing large scale events.

Each partner also has the responsibility to help make fund-wide operating decisions. We run DRF like a startup in its own right, which means every decision made needs to take into account our goals and limited resources. Everyone has an equal say, and many partners go above and beyond their daily responsibilities with additional special projects.

How can I join the team?

To join the team, you need to be a full-time student with at least a year left in your program. We look for new partners every winter, and don’t take any partner applications outside of our recruiting window! Sign up here if you want to be notified next time we’re recruiting.

Everything Else

What does DRF offer its portfolio?

We start off our onboarding meetings with one crucial question: who is the one person we can connect you to that will have the most impact?. This is pretty representative of your entire experience with DRF. In addition to quarterly checkins and access to any of the partners, anytime you need, we strive to build bridges in our community that create value for everyone involved. We also throw regular community events, so you can meet all the other awesome people in our family 🤗.

Of course, we also shower our founders in a plethora of presents. The first is access to First Round’s impressive repertoire of operating knowledge, and it only gets better from there. We have partnerships with several key players to provide resources for our companies, including AWS, DigitalOcean, GitHub, and WeWork. Last but not least, we have plenty of swag!

Our primary focus is to support you until your seed and later-stage investors can step in, but DRF has your back forever. #DRF4Life

What happens if there’s no DRF team in my city?

We would still love to chat with you! Please reach out and we’ll connect you with a partner in the closest city to you. We routinely invest in companies outside of our four core cities, and are always looking for more inspiring communities to get involved with.

What is the quality distribution of pitches to DRF?

Every pitch we hear is incredible! Both the founders and partners go through a long process from application to pitch, making sure the founders have the best shot at getting funded. The best pitches are the ones that address the concerns of the partners, and dive deeper than what was discussed over coffee chats.

In terms of distribution, it’s very bimodal: roughly half are good, and the other half great. Very few are amazing, and even fewer are bad. It’s worth noting that an amazing pitch is by no means a guarantee of funding, and a rocky pitch won’t destroy your chances.