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Reflections on 2 Years at Dorm Room Fund

Key takeaways from my time as First Round’s eyes and ears on America’s college campuses

Shawn Xu
Shawn Xu
Jun 19, 2019 · 9 min read

As I reflect on my time in grad school at Wharton, I can’t help but think about the transformational experience I’ve had with Dorm Room Fund. As many folks have heard me say, I would have left grad school a long time ago if not for this incredible opportunity to meet and work with the best hustlers and innovators in our generation. I’m taking a page out of DRF alum Nathaniel Horowitz’s book and taking a moment to reflect on what I’ve learned in my time here.

I’ve written about this extensively in TechCrunch — I believe Dorm Room Fund has helped enable a dramatic expansion in the resources available to student entrepreneurs. We’ve been up and running for nearly 7 years. In that time, our student investment partners have funded 275+ startups founded by student entrepreneurs across 40+ college campuses. These companies have gone on to raise $700M+ in follow on capital from top tier VC firms such as Sequoia, A16z, and First Round. The companies we’ve backed are collectively valued at more than $1.5B+ and have done amazing things like launch satellites into space, invent better ways to recycle plastic, pioneer new blockchain applications, and more. It has been a privilege to be a small part of their entrepreneurial journeys.

There’s a whole lot more to learn, but I believe Dorm Room Fund has made me a better investor. I have a stronger point of view on what makes a great company after assessing 200+ startups and funding 25+ companies over the last two years while serving on our teams in Philadelphia and San Francisco. To name a few concrete examples, I believe I have a more informed perspective on what strong founding teams, sticky products, network effects, and competitive moats should actually look like in real life. It’s pretty different than what’s taught in the classroom. Perhaps most importantly, I have a deeper awareness of the areas I need to personally improve upon — my investor “blind spots” include things like underestimating technical product risk and over-indexing on the signal of early traction. I’m working on it! Finally, I think I’ve developed a deep appreciation for venture as a team sport — each of my investment partners brought unique expertise to the table that I didn’t have, and I think we made better decisions together because we had this diversity of thought. It’s something I can see now amongst the great venture funds.

Dorm Room Fund let me take a stand on what my partners and I believe the future of investing and entrepreneurship should look like. Perhaps one of our most important positions is our belief that the startup ecosystem should be more inclusive, period. The status quo that we’re set to inherit from previous generations of investors just doesn’t look good. In all of 2018, female founders raised 2.2% of venture capital dollars. From the pool of funded startup founders, 8% are women, 1% are black, and 1% are Latinx. A shocking 40% of investors come from just two schools. We’re hoping to fix this by seeding the ecosystem with a pipeline of young investors and venture-backed founders who are women, people of color, and graduates of schools outside the Ivy League. My partner Shohini Gupta has been leading the charge on our Female Founder Track, which focuses on mentoring female entrepreneurs and plans to run its second cohort in New York City this summer. My partners Courtney Andrews and Mario Ruiz launched the Blueprint Project this year, focused on mentoring founders from minority backgrounds. My partner Adele Li is building on work from older partners to reach founders at schools outside the San Francisco, New York, Boston, and Philadelphia markets we’re based in. I‘m really excited about this work.

While I don’t have “favorite” portfolio companies within the Dorm Room Fund, the investments I’m proudest to have made are in the founders tackling the world’s most difficult problems. I often get asked where my optimism comes from. The answer is an easy one — it comes from these young founders who are passionate about “being the change they wish to see in the world”. The founders of each of the companies below live this mantra, even when up against all the odds. It is beyond rewarding to watch them at work.

  1. Robhat Labs (defending elections): Rohan and Ash from UC Berkeley are building tools that leverage ML and NLP to fight political misinformation on the Internet. Their first product flagged 1M+ propaganda bots on Twitter. Next, they’re focused on detecting fake photos and videos.
  2. Strella Biotechnologies (fighting food waste): Katherine and Malika from Penn are building biosensors that accurately measure the ripeness of fruits and vegetable produce in real time. This is a gamechanger for the 40% of food that goes bad before even making it to the store. They’re on track to dramatically improve the supply chain for farmers and packers.
  3. Marigold Health (improving mental health): Shrenik from Johns Hopkins University is building an app that provides a 24/7 peer support group that is used as a complement to clinical mental health and substance use treatment. They’re focused on providing a powerful tool for the most underserved patients recovering from opioid abuse.

My fellow partners at Dorm Room Fund who go on to start companies have set a personal benchmark for what strong founders should look like. Nearly a fifth of us go on to build startups, from Shubham Goel’s Affinity to Anjney Midha’s Ubiquity6. There really are too many companies that have been built by partners and alumni to highlight, but here are a few from my time that I think are going to be epic.

  1. Karuna Health (improving healthcare coordination): Yasyf and Joe, alumni from MIT and Harvard, are building a platform that helps coordinate care for high-cost, high-need patients. Both were recently named to Inc’s 30 Under 30.
  2. Alama (coding bootcamp for Ethiopia): Yoni, a new grad from Penn, is building a coding bootcamp for developers in Addis Ababa. He trains them, then connects them to software engineering contract jobs that offer 10X higher pay than what they would make anywhere else.
  3. Seer Tracking (protecting the planet from space junk): Amber, a current partner at Stanford, has built a product that leverages AI to track and map space debris. Amber was previously named to Forbes 30 Under 30 and has won the Intel Foundation Young Scientist Award.

Dorm Room Fund taught me that you can learn just as much from your anti-portfolio as you can from your current investments. As a mentor once shared with me, it’s inevitable that you’re going to have misses in this business, and it will likely happen often. The best you can do is to run post-mortems after each one, learn from them, and have the humility to laugh about them along the way. I’m a big fan of Bessemer for publicly publishing their anti-portfolio report (my favorite is David Cowan running away from the Google cofounders). In this spirit, I’d like to share three that still keep me up at night.

  1. Brex (corporate cards for startups): An investor friend introduced me to their cofounder Henrique Dubugras, who was still enrolled at Stanford at the time. They pitched me on a BD deal that would have included our portfolio companies in their pilot for startup corporate credit cards. I asked 1–2 founders for their opinions— they were skeptical and I moved on. I didn’t even think to consider Brex for a potential investment! Well, I should have dug into it more, they’re now eyeing a $2B+ valuation. Lesson learned — potential deals can come from anywhere, pay more attention.
  2. MarketSnacks (podcast for financial news): I met cofounder Nick Martell at Wharton pretty early on. He is awesome and I count him as a friend. He built out a newsletter and podcast for financial news that I loved and even evangelized on social. Even so, I couldn’t bring myself to invest in a company solely focused on content. I didn’t even reach out to discuss a potential DRF investment in the first year. Jokes on me, by the time I changed my mind in the second year and reached out for real, Nick shared with me that MarketSnacks would became Robinhood’s first acquisition ever. Super happy for Nick, but lesson learned — you should invest in your friends.
  3. Mon Ami (companion care marketplace for seniors): I co-organized the Wharton Entrepreneurship Summit at Google SF last year with my friend Jerry Lu. Mon Ami, a marketplace that offers families a way to book college student companions for older loved ones, won our MBA pitch competition! That came with an equity-free $20K check from our headline sponsor Accenture Ventures. I got to know Madeline and Joy over an awesome dinner we hosted the night after the conference. They are awesome founders from Stanford who really care about their mission to address social isolation and loneliness in aging. By the time we followed up to discuss a DRF investment a few weeks after, they had closed a pre-seed round led by Felicis Ventures and Maverick Ventures. Lesson learned — speed matters.

Dorm Room Fund introduced me to a community of peers that continue to make a huge difference in my life. My partners make me better every day, and I am inspired by their infectious energy and dedication to effect change in the causes they care most about. Each debate over interesting companies surfaced contrarian perspectives I’ve heard nowhere else (ask Matthew Mizbani about his Blue Shoelaces theory or Toni Oloko for his framework on Insane People). Each member of the community has jumped at the chance to help each other. I literally owe all my opportunities in venture to DRF alumni who vouched for me to general partners who eventually became my bosses. I hope to pay it forward in the future!

Dorm Room Fund showed me the importance of having good mentors. The partners at First Round have been incredibly gracious with their time — from brief 15 minute phone calls for tactical advice to long lunches with the DRF partnership to impart venture wisdom. I’ve learned so much from all of them. Josh Kopelman’s framework for picking great companies is something I think about often. Phin Barnes framework for thinking about venture as a product and his thoughts on solving diversity debt are subjects I talk about all the time with other investors. Rei, Molly, and Chauncey challenged me to seriously think about what leadership should look like within a large decentralized organization. It should come as no surprise that it was Josh, Phin, and Chauncey who walked me through my most recent career inflection point and convinced me to join the venture capital firm I’ll be headed to after school (TLDR: optimize for mentorship, not titles or compensation).

I am so grateful to Dorm Room Fund for giving me an education and a family these past few years. DRF is the reason I’ve decided to dedicate the next chapter of my life to finding, funding, and supporting great founders. I love being the first believer in great entrepreneurs and I love writing their first checks. If you’re a founder (or know a rockstar who’s about to take the leap to start a company) and you’re interested in getting a deeper download on what I’ve learned in my investor journey, please get in touch at sxu@dormroomfund.com!

Special thank you to First Round for launching this incredible organization. I can’t wait to collaborate as an active alum.

Startup Grind

Stories, tips, and learnings from and for startups around…

Thanks to Shohini Gupta and Phin Barnes

Shawn Xu

Written by

Shawn Xu

Investor @FloodgateFund | Formerly @DormRoomFund @Square | MBA/MA at @wharton and @lauderinstitute | Forbes 30 Under 30

Startup Grind

Stories, tips, and learnings from and for startups around the world. Welcoming submissions re: startup education, tech trends, product, design, hiring, growth, investing, and more. Interested in submitting? Visit our submission form here: https://airtable.com/shrShpeN89HrzCzOB

Shawn Xu

Written by

Shawn Xu

Investor @FloodgateFund | Formerly @DormRoomFund @Square | MBA/MA at @wharton and @lauderinstitute | Forbes 30 Under 30

Startup Grind

Stories, tips, and learnings from and for startups around the world. Welcoming submissions re: startup education, tech trends, product, design, hiring, growth, investing, and more. Interested in submitting? Visit our submission form here: https://airtable.com/shrShpeN89HrzCzOB

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