How to Raise a Student Venture Fund

Growing up, I always knew I wanted to be an entrepreneur. I was the kid with the lemonade stand, landscaping company, and whatever other ventures I could think of. I was very fortunate to have people in my life in and around the entrepreneurship space to emulate. However, they were all on the entrepreneur side, and I didn’t really understand how private company funding worked.

As I arrived at college and started immersing myself in UConn’s entrepreneurship ecosystem, I started to learn more about venture capital and the process of investing in startups. This piqued my interest because instead of focusing on one industry or idea you could focus on many. I wanted to learn as much as I could so I started networking with folks in the space, reading content, listening to podcasts (shoutout 20VC), and trying to form my own perspective on startups and industries. As I started to learn more about the space, a trend started emerging: student venture funds. These funds were small funds (usually sub $2M) typically investing in startups from their school, and every year new students were involved. They were split into two buckets: a fund focused on one school, like Atland Ventures, or a fund focused group of schools attached to a large VC fund to help with dealflow and create a talent pipeline for their portfolio companies, like Dorm Room Fund, (typically reserved only for students at elite schools). At the time, neither of these programs existed at UConn. The more I learned about these programs, the more the inner entrepreneur in me got excited. I broke it down into a simple problem and solution.

Problem: Students at UConn did not have the opportunity to learn about VC in a hands-on way

Solution: Raise a VC fund for students to invest in UConn companies

After that, I decided that I needed to start this fund. It took three long years, but now Hillside Ventures has been around for two years, invested in 10+ companies, and sent students to VC, PE, Growth Equity, high-growth startups, and more! This piece will go into the process of raising the fund, as well as some tips and tricks for replicating this at other colleges.

Fund Overview:

- 1M+ fund (75% for investing, 25% for expenses)

- 20–30 students involved per year on the investing side

- 10+ portfolio companies

- Upper-level class for students involved in the fund to do fund activities

- Intro class for students interested in learning at a basic level what VC is (VC 101)

Step 1: Finding Other Students

The first step in the process was to identify other students that were interested. This endeavor is not something you can or should do alone — it is a team effort. I started reaching out to students I had met through other entrepreneurship clubs and classes to see if they wanted to join the group. This process brought in new students and also helped refine the pitch. Simply talking with others about the fund spurred ideation and improvement. Once we had a solid team and had iterated on the idea together, the next step in the process was to find someone in the faculty to support the idea. Luckily, there were seismic shifts in the UConn entrepreneurship system taking place at the same time.

Step 2: Finding a Faculty Partner

One of the key aspects identified early on was that this project was one students could not do alone. We would need a combination of students, faculty, and alumni. Luckily, at a similar time, the Werth Institute, UConn’s entrepreneurship center, was being launched. As part of the process, they researched programs at other schools and spoke with alumni about what they wished UConn had, and the idea of a student venture fund came up. When I got introduced to the Institute director, he shared a common interest. But, the idea was still not ready for primetime yet. We kept iterating the idea and growing the student team. Over time, it became more fleshed out, and a year later we were ready to move to the next step, pitching the university administration.

Step 3: Administration Approval

Given the nature of the program, this was a program that would need to be approved by the university administration. A university president has more pressing issues than the creation of an investment fund, but we needed their approval to proceed. Buried in the daily newsletter most students breezed through, we found that the president was holding open office hours — any student who wanted could show up. So, we showed up, were the only students there, and were able to walk him through the pitch deck. During that meeting, we got his preliminary support and approval to set up the final steps before actually pitching the LPs, gaining further University administration approval, and finalizing the structure with the UConn Foundation.

Step 4: UConn Foundation

Like many universities, UConn’s endowment is run as a separate nonprofit. They raise funds for various programs and help ensure the university continues to grow. In a similar vein, they also run a public equities fund for students to invest in. As we continued to work with the University administration, it was decided that these funds would need to be new funds raised by the students and managed by the UConn Foundation. Throughout the process, the students had the exciting opportunity to educate folks about the VC industry, which sharpened everyone’s knowledge of the space. After about six months of discussions between the Hillside Ventures team, administrators, and the Foundation, we were cleared for our first pitch with friendly alumni.

Step 5: Investment Thesis Process

Throughout the process, the students were participating in an independent study class on raising the fund. This class gave the students the opportunity to learn from experts in the field and receive academic credit for their hard work. During the fundraising time, the class was mainly focused on developing the investment thesis. UConn-related startups were always going to be part of the thesis, but feedback received was that there should be additional industries of focus. After researching over 15 different industries, it was narrowed down to three: insurtech, edtech, and sustainability. Insurtech was selected due to Hartford’s major role in the insurance industry. With the UConn campus only 30 minutes from Hartford, it just made sense. Edtech was chosen due to the advantages of being at a university for an edtech startups’s product testing and access to professors who were experts in education. Later, this theory played out perfectly on our first investment in an educational gaming startup where we were able to connect them with an expert on the subject from the school of education who helped validate their product. Finally, we selected sustainability due to UConn’s history and success as an agricultural university.

Step 6: The First Pitch

Our faculty partner had identified an alumnus in the private capital space to be the first pitch. So the Friday before spring break, I traveled with our faculty partner to the office of this fund. After over an hour of some very tough questions and ideation, we had genuine interest and a follow up meeting. This was one of the toughest meetings of my life, but it was exactly what we needed to push the fund after that. Unfortunately, the meeting happened to be on March 13, 2020, and after that, the world shut down.

Step 7: Revised Pitch & Final Approvals

For the next three months, we took a brief interlude as the world adjusted to the new normal. Once everyone was as settled as they could be, we had a follow up meeting with that same alumnus. After more back and forth and additional meetings, they were in. This process showed that we were ready for the final approval. In order to get final approval, we needed sign-off from two university boards: the Board of Trustees and the UConn Foundation board. On Zoom calls, we presented our project and idea, answered questions, and received approval from both boards. Then, it was on to other alumni to raise.

Step 8: The Raise Kickoff

Early on in discussions with alumni, we were able to identify four of them to help lead the project from their side. We decided to do a virtual event to kick off the fundraiser where we invited people we thought would be interested to learn more about the fund. The four alumni kicked things off sharing their experiences in private capital and why they were interested. Then, I spoke about the fund and we answered any questions people had. Getting people together like this was great because it showed the value of this fund was not just the students, it was also the other alumni you got to meet. I would recommend an event like this because getting everyone together in a room or call is really a force multiplier.

Step 9: Closing

Just because we got people interested didn’t always lead to instant investment. After the event, we had to be proactive and set up follow up calls with folks to get them over the line. One by one, we met with people and shared the vision and one by one, we got people to join the fund. Each individual greatly enhanced the network, so instead of anchoring with a few LPs, we wanted to have as many as possible. We ended up with 20+ LPs, which was a great way to bring together the community. Once we reached the ~$1M we were trying to raise, it was time to call capital, and then the fun began!

Step 10: Investing

After years of work, it was finally time to deploy capital. With our investment thesis research, we had begun identifying themes we liked within those sectors and beginning to meet with companies who fit those trends. If you wait until the capital is fully raised, it is too late. We started talking with companies about investment 3–4 months before we closed the fund. However, throughout the process we were meeting with startups to establish deal flow and understand trends. Once we closed, we were ready to go and had a couple of companies ready to present to our investment committee. After some back and forth with the committee, we were able to invest in our first company about 2 months after we closed. From there, we kept chugging and have now invested in over 10 companies.

If you are interested at all in VC, I definitely recommend participating in a program or if that is not possible, starting your own. The process is daunting, but the payoff is worth it. Throughout this process, you will learn vital skills in fund administration and investing. A big part of learning VC is participating in diligence and deals to build up your experience. The feedback cycle is long, especially when you are investing in early stage startups. The earlier you get started, whether you are investing or not, the sooner you will be able to improve your thesis and become a better investor.

I could not have done this alone and a big thank you goes out to all the alumni, students, professors, faculty, and administrators who made this dream a reality and continue to grow the program every day. To current college undergraduate or graduate students, if you have any questions or are interested in starting a fund at your university, I would love to help — just shoot me a message!