Have you ever felt like the world of startup investment is unreachable outside your weekly episode of Shark Tank? Mike Annunziata, a student at Cornell’s Johnson Graduate School of Management and an active member of the Cornell entrepreneurial community, hopes to change that.
Annunziata is a Partner at Dorm Room Fund: a student-run venture fund supported by First Round Capital. Dorm Room Fund invests exclusively in student-run businesses, and its impact is widely recognized across the United States though its partners operate out of university hubs in New York City, Philadelphia, Boston, and San Francisco.
“We want to get the entrepreneur off the ground,” Annunziata explained. “We’ve invested in over 100 student founders, and we have more than 40 partners. The network of alumni continues to grow.”
For Annunziata’s thoughts on Dorm Room Fund, Cornell entrepreneurship, and what Dorm Room Fund looks for in its investments, read more below:
Why have students involved in the investing process as opposed to traditional venture capitalists?
To be a successful investor, you need to have empathy. You need to relate to the entrepreneur. Investors need to understand the feeling of going to bed and waking up each day with the weight of founding a student company on your shoulders. Having students create those relationships allows those levels of empathy to exist. The relationship with DRF is a personal one. As a student, I’m comfortable sending a text for us to grab lunch at CTB or meeting at eHub to talk about your business. That helps build rapport and allows us to build trust on a personal level. It’s really important to give student founders someone they can relate to.
How do you encourage the students you invest in to balance college life with their startups?
Anyone who has tried to start a business would say it’s hard and time-consuming. If you want to do it the right way, there’s no compromise. One of the ways you can look at it, though, is that starting a business in college is your own unique college experience. You have to view your startup team and your mentors as your friends and your family. It’s not that different from a club or fraternity where you spend time with those people and enjoy spending time with them. It doesn’t come without some sacrifice, but to build something truly great, that’s often what it takes.
What does Dorm Room Fund add to the entrepreneurial ecosystem at Cornell?
Our goal at Dorm Room Fund is to create the strongest community of student entrepreneurs. We facilitate that through capital investment, special arrangements with service providers like Amazon Web Services and Microsoft Azure, and through the power of our network of entrepreneurs and industry leaders. DRF brings a direct line of communication to communities outside Ithaca via our teams in San Francisco, Boston, New York, or Philly, and our relationship to First Round Capital.
Can you give me a specific example of how you leverage that network?
If you’re one of our entrepreneurs, we ask you, “Who are three people you want to get connected with?” We do our best to connect you to those people. While an hour-long one-on-one meeting with Mark Zuckerberg might be tough, a meeting with a Product Manager at Facebook to find out how to integrate an application with the Facebook API is likely something we could make happen.
What are your plans to build the weight of Cornell startups in the portfolio?
First, I want to establish the brand of Dorm Room Fund and demonstrate how we can add value to the Cornell entrepreneurial ecosystem. Cornell is home to innovative research across a number of technical disciplines, and I hope to be a resource to help foster the commercialization of that research into ideas that change industries. When we find good opportunities, we hope those entrepreneurs we fund will become evangelists for DRF and the quality of the resources we provide.
What do you look for in the companies that you invest in?
When I’m sourcing opportunities, I pay just as much attention to the inter-team dynamics as I do to the market opportunity or the problem being solved. It’s a prerequisite that you have a good idea, but it’s also necessary to have a team that’s behind that idea, especially early on.
What makes a good team partnership in your eyes?
One thing I’m fortunate to have is an undergraduate education from the ILR School (“Industrial and Labor Relations”). At ILR, we focus a lot on the team, group dynamics, and motivating people. As an aspiring entrepreneur on a college campus, I’d seek out people that are different from you that first and foremost are committed to your idea. A great example is the Entrepreneurship and Business Ownership class in the Johnson School. It puts together not just business school students, but undergrads, engineers, and more to create interdisciplinary teams. Being able to work with people from diverse backgrounds will likely position you better for success than saying, “My friend and I want to start a company” will.
What kind of metrics do you look for to evaluate the success of your investments?
When I measure the success of Dorm Room Fund, I look at the strength of the network and what we’re doing for student entrepreneurs. There are different measures of success because the ecosystem isn’t just the dollars into new companies, but it’s people being entrepreneurs 10 years down the road and giving back to the community. We also have people who are going to intern at places like Google and Facebook. In the future, we hope those people are going to be the ones really moving the needle and talking about how their experience with Dorm Room Fund got the ball rolling.
What’s a good milestone for an entrepreneur to hit before starting to look for funding?
It’s important to have a good grasp on why you need money and why you need it now. Ask yourself, “have I demonstrated true product market fit?” Have I gotten someone to buy my product or service? Have I been able to quantify the benefits of what I’m doing? Has our team created an MVP (minimum viable product) that does something that’s never been done before to go after a market that’s never been fulfilled before? Do we have an order we need to fund?
[That said,] try to go as far as you can without getting investment. This is the Steve Blank, Lean Startup methodology and I recommend giving his books a read. You can go really far just by saying I’m a student at Cornell working on a project. There are a lot of ways to get funding and traction beyond selling a piece of your company.
How do you want students at Cornell to engage with Dorm Room Fund?
Start companies! There are ample resources at Cornell through Entrepreneurship at Cornell, eLab, Blackstone LaunchPad, eHub, and the myriad of entrepreneurship courses offered through schools like Engineering and Dyson. Demonstrate why your company is going to be great. One of the good ways to do it is to apply to eLab. You get access to an on-campus working space, mentors, funding, and an introduction to the nuances of entrepreneurship. Anybody who wants to work with Dorm Room Fund should get more involved on campus in general and then come see me in office hours.
For more on Mike Annunziata and his role at Dorm Room Fund, drop by his Tuesday office hours 5 pm – 6 pm in Collegetown eHub.