Sept. 1, 2020

Student-led VCs - how do they work? By Ayushi Sinha, Co-Founder at Prospect Student Ventures.

Student-led VCs - how do they work? By Ayushi Sinha, Co-Founder at Prospect Student Ventures.

Ayushi Sinha, Co-Founder at Prospect Student Ventures explained how their student-led Venture Capital works, what do they invest in, how do they source their deals and how did they manage to raise it. We've also discussed major mistakes that students make while building their startups, so this episode is a must-listen for any US-based student founder.

Prospect Student Ventures: https://www.psv.vc/

Ayushi's publication on finding a role at a Dope Startup: https://medium.com/@ayushisinhahaha/how-to-find-a-role-at-a-dope-startup-d5d74d7f956f

Book about Yale's female entrepreneurship: http://yalewli.org/remembering-50

Our video recording: https://www.youtube.com/watch?v=Evh4ttFWxr8&feature=youtu.be


Transcript

This is fun reason redo. And today's a guest speaker with Co founder at prospects student Ventures for instance, first student led VC and base up. So we'll talk about how those student led work. 

What do they invest in which topics they focus on and which stages they focus on? So unless you count, but you're giving us some background on yourself and on prospects student Ventures. Absolutely. 

Will Constantine, thank you so much for inviting me to be a part of this show. 

I recently graduated from Princeton this past spring a class of twenty, twenty, where I studied computer science in the engineering school, and received certificate in cognitive science. Most of my, I supposed professional educational career. 

Thus far has really focused on gaining experiences at different parts that venture creation and supporting timeline. 

So, everything from scaling a company from zero looking, like idea to actually having a product from users. I Co, founded willpower, which is a clean water for excuse me. 

And ever for clean water filtration and distribution in East Africa. 

And that happened about two and a half years ago. I've all sort of kind of like based on the sort of precocious progression of having founded these companies and sort of what support is needed. 

So, I printed out was really involved with our entrepreneurship club and Co, led that as well as cola tire launch, which is the largest student run entrepreneurial competition. So, got a lot of experience, starting my own company. 

But also getting exposed to other student founders, 

and seeing all the great things that they did, 

but also recognizing some of the biggest hurdle was getting access to capital as a student founder. 

And so that led me to sort of be this VC student fellow at point. 

Four six ventures out in Boston as well as spend the last two summers working at Microsoft, 

but as a software engineering product manager in sort of artificial intelligence and research as well, 

as Internet of things just like under Microsoft with all their, 

all their good cloud stuff. 

I suppose my next adventure, what I recently do now, is I'm a PM at night, which is just sort of working on a ai for radiology. 

So that, I guess, in a nutshell, kind of my experiences as far, and sort of how I plugged into different parts of the entrepreneurial journey. 

Yeah, and your background huge I took a close look at your link to and there's just like insane amount of work that you've done. So great work. Congrats. And everything that you've accomplished and let's talk more about prospects student Ventures. How is this structured? 

So, is it an actual BC, or is it more like, student led organization does nonprofit? How exactly does it work? Yeah, so the structure is the latter. 
It is technically a student led organization that, you know, and us, because it's under the university is a nonprofit, and I can kind of talk through the structure itself and sort of why we chose those. 

Let's do that. So in terms of structure, it's actually based, like, like a typical fund. 

So, we have two many partners, five general partners, a bunch of principals associates analysts. We wanted to make sure that we had a structure that we make that other VC fund. 

Because it's for two reasons one, we want the student founders. 

We interact with to sort of get us closer to the experience as possible and to that's kind of the tried and true structure of decision, 

making of sourcing diligence, 

et cetera and we wanted to give students who were part of this club on the diligence side exposure to the inside view, 

and how we see really works in terms of the structure of the club itself. We also have have a board of three people. So. 

One alone, Stephanie shared myself having Co, founded the club and now we've gone to an advisor role and third professor who Josh who's a professor of entrepreneurship and venture capital at Princeton. 

And so that is sort of, you can say our piece almost as in terms, like, they're the ones we update as well as we have, like, a handful of donors who so kindly, you know, financially supported what we're doing. 

Of course, the decision to be a non profit was definitely challenging one. So we considered a couple options specifically. 

We were thinking of initially kind of incorporating as a evergreen fund, you know, which means that we would just continually be investing those profits. 

With sort of the investment vehicle being safe again very similar to sort of what a lot of founders early on will, you know, encounter. That's what the traditional I see. Sort of like an investment method. Right? 

The reason that didn't sort of, 

like, 

that wasn't the best fit for what we want to do was a couple of reasons first, 

our mission a project student Ventures is to empower students are often under resourced to basically build up their ideas with these one to ten. 

K grants, and oftentimes at the stage in which we're investing. Right? 

Because we kind of think of like, there's a gap, the Princeton ecosystem, they're really bright kids who are quite technical, have a really good attitude and that business mindset. 

I mean, they work on your long independent working through your papers PCs. So they know how to build something. 
A lot of these sort of companies have their own, 
but there's a gap and getting that these ideas and really novel ones often to the stage where they were like a dorm room fund a hunter capital, 

a rough draft Ventures to invest in them. 

So, 

we see ourselves as filling that gap and since we're filling that gap, 

where we found that needs to be the most, 

we realized at that stage, 

most students actually have not incorporated their company because incorporation costs money and sort of you need to have a, 

and that's farther along as well and so. 

Since saves require the company itself to boot, to be incorporated and because at that stage, it's so early that any sort of valuation, Pre, revenue, Pre product often times. 

We thought that going the nonprofit route with Grant would make more sense. And, of course, the other part of this, right? 

Is actually giving the students app, Princeton the inside view,
and experience drift sourcing,
due diligence, 

et cetera on these startups as well as doing these pro bono research projects for to get the into side view as well. 

So, in a nutshell, that's how restructuring right? There's a live support to pretty much everyone who's involved in the process. So great work. Great work. And I totally understand why you chose to go nonprofits. You know, it's just so much paperwork to organize an actual structured VC. 

So good choice I think, for starters. So, let's talk about how you invest and what do you invest in you've already mentioned that you're investing in Pre, Pre product, Pre, revenue basement. So that's clear. I'm not gonna ask you that anymore. 

But where do you find those deals? So how exactly do you find those deals? 

Do you have a network of basically students who are part of prospect student Ventures who are currently go into Princeton and they just source the deals through their classrooms and finding out those great interpreters. So, how exactly. Do you find those deals? 

Yeah, that's a great question. So I will start off with, like, sourcing and then if you'd like, we can always to into the actual sort of investment process itself. 

So, when it comes to sourcing, so, premises by Princeton happens to be sort of, on the smaller side of universities about like, five thousand undergrad itself, eight thousand, total. 
And so I'll first partition it between, like, how we were for undergrads and how we tortured grad students, grad students it's no surprise or often working really interesting research with their professors. So that's why you go to certain Labs. 

Right? And and sort of a certain professors have reputations for having more particularly minded Labs. For example, I took an M. L classes. Brian Adams who's previously sold a company to Twitter. 

That's definitely a lab that we keep our eye on. And, of course, part of that is having those first relationships by taking a class of professors, but also just like, knowing graduated from that class. 

But also knowing like juniors and seniors who were working on their independent research. That's something you'd really Princeton is that research while of course, maybe he's more full time in the gospel. The undergrads also get access to those really exciting Labs. 

And that's more like the, the core research part of things to kinda get a little bit more to your sort of, like, traditionally think of undergrad student founders, maybe building, like, another et cetera. How do we find them? 

Well, here, it's important, I think, to know, like, the printed entrepreneurial sort of ecosystem and so I think I'll sort of spread it out from, like, idea generation to actually building out projects. 

So, to find the people who are working on, like, ideas at the very early stage, like, of course, I think what you talked about in terms of our sort of remembers. 

Tapping into the personal networks being scouts. Of course, I think that's a given, but we're definitely a little more curated a more mindful for where we look specifically I. D, stage all the, you know, intro entrepreneurship classes typically have a final project. 

So, 

like, 

going to those pitch pitch events, 

we also have some sort of programming do the Keller center for entrepreneurship as well as the classes that I mentioned as well, 

as sort of the student led clubs,
particularly sub teams under the prince entrepreneurship club. 

So those are the three ways where we sort of kind of understand, sort of what building to the surface. But, of course, you know, we get really excited about when someone not only has an idea. 

But has begun to build that out either technically, or sort of more more conceptual, et cetera. And so, for there, there are actually a couple sort of things that we look for right? 

Like, one does person itself. Have they just come to print and chopping up a bit, you know, having creative companies? 

Are they incredibly gifted or technically, like, I think that's the part where we're like, you, it's all about knowing who has the ideas, like, where the talent is and to be super honest. 

Constanty, not something that we are still trying to figure out and I think everyone in has their own way of thinking about talent if you'd, like, happy to kind of dive into what we think about doing our coffee chats. 
But they're specifically we have a couple of classes that upperclassmen take, who are really interested in the Nexus, a computer science and in entrepreneurship taught by some professors. 

Actually, one of those, this is advisor. So we definitely go to those final projects as well. Because those students have all actually built out technical for their startup ideas, compared to the entrepreneurship classes, more ideas. 

And then, of course, we do have this summer accelerator called the E lab. 

I'm not sure how we source specifically for student founders on Princeton campus. Perfect. That's a perfect description. 

And actually, yeah, I want to dive just a little bit deeper into the approaches of MVP, and sort of deciding which MVP is good. 

And which one is not really good, because I've personally been on campus for quite a while before they call it hit specifically at USC because we're in a different coast. But one of the things that I saw there is that a lot of people just put. 

So much time, and sometimes money into those entities and developed so much so many unnecessary tools. 

In your opinion what do you think is the major mistake that people that founders that student founders specifically to when they're developing this minimum viable product? 

No, that's a good question. 

So, just to repeat it back to you, what is the biggest failure point that I, as the CO, founder point of view but also, having been the student founder, myself, find to be that the biggest chasm or the biggest failure Yup. 

Yup, exactly. You for phrases way better than I I feel like keep going, keep going, keep asking yourself good questions to rephrase to make sure I I do answer the core question. There. That's an excellent one. 

So, I think that I will probably start start personally, and then maybe expand. 

So, personally, I think the biggest failure potential failure point that well, power could have had, as we assumed done just created this. It was honestly within the first, six months. 

So, we had built a working prototype, but it wasn't honestly far enough along to where it's in the game. But to where that there was something like. 

But then, maybe other people have thought this is not worth fighting for because somebody knows that printed. Right it's like, people are pulled in a gazillion different directions. And I'm sure this is not unique to our campus. 

But,
you know,
as a student,
you could choose from doing your pieces and your GPA from recruiting and the list goes on, you know, 
spending time with your friends,
being the list goes on for how many things really try to try to make it on your calendar. 

And so where, I think the most people fail actually is, this is gonna sound simple, but literally dedicating the hours to this. And again, this might sound very naive and very obvious. 

But the biggest thing that we did as a company was, we looked at everyone's calendars and said, okay, when does everyone have weekly piece that's do, you know, when are everyone's midterms and literally planned out on a semester. 

And this was for the first semester, when we were, like, in the ideation phase, as you said, before we sort of, like, put into many resources was that, like, let's make sure that we literally block off the time to commit to this. 

Like, what am I really good friends actually out in the bay and I talk about, like, is it about hitting our goals or putting time into goals? And I generally think so many things. 

Ask for your time, especially as a student right? Because when you finish class, you have peace that you have the list goes on. Right? I think it's a little different than maybe something we're gonna side hustle at work. 

I guess you might be, like, cognitively, just, like, done when you come back, but, like, nine to five, like you have from five to nine to work on this and that's just not the case for most cautions. 

So, I would say the biggest point that I see people not just simply not dedicating the sheer number of hours needed to build out the company in the early stages to get to that point where they have an MVP. 

Of course, I think maybe what you are probably better referring to is it's really validating problem. I feel like that's nothing new either. 

I think it's kind of hard to validate on a college campus when you sometimes I'd be insulated, but that's right. 

Where you tap into your own membership networks, where, you know, someone like a comes in with our expert network to say you're working on this industry or this vertical let's connect with an expert who's worked in that space and so definitely getting the inside view. 

So those are two things, one usually block out hours in your calendar to work on your startup especially early days and to make sure you have the inside view. You don't. 

I personally don't think you have to build a product for a user who you personally resonate with for someone like you. Right? 

But in the cases, where you don't write, like, a willpower, like, we had to make sure we went to Kenya. 

Like, one of our Co founders was Kenyan, because you have to have that inside view, because then we would have built something that didn't actually solve the underlying core problem and therefore, like, people, like, probably wouldn't have paid for. So those were my two hypotheses there. 

So here is a time for a stupid question. You mentioned this acronym, like, five times, and I never figure out was P. S. V. what's that? Stand for? 

For a little bit I missed it again. Tenure repeated again a prospect student Ventures anxious. I was like, okay now. Okay. At least it's not something like super simple that should have known that before the interview. 
But anyways, now that it's clear now, let's talk about, how do you actual raise your own fund so those fundraising radio so basically everything is set around fundraising. So, let's talk about your fundraising. 

How did you manage to raise prospects? Union Ventures fund? Yeah. You know, it was a huge learning process. 

The short the short answer is we reached out to a bunch of people, number three again. I mean, very similar to sort of like twenty fifty for startups. I imagine twenty fifty for anything like this. 

It takes a lot of hustle and it takes a lot of hours. 

Honestly, silver lining of Corona has been that we had the hours should really go all in, but of course, you know, it wasn't like, I wasn't like unplanned. Right? 

So into how we specifically thought about our strategy for going forward was a couple stages to first. 

We thought about the stage of, like, let's validate this idea as as a fund right? We have hypothesis that there's this chasm that soon founders aren't able to cross. Let's go out and see, that's really problem. 

So, first in our fundraising process, and this is gonna be, like, wait, these people aren't giving you money. So why did you talk to them? And I disagree I think, like, you wanna make sure that you get all the critique upfront. So, we talked to so many Princeton professors we talked to everyone in our Keller center. 

We talked to a bunch of student founders, personal mentors. The reason we did that is to one, because we generally wanted to test our idea. I took the civil liberties class and professor Robert George always said you want to test your idea and the marketplace of ideas right? 

Are there other ways and going about doing what you did? Right? I really having a narrative for, like, why we're nonprofit. 

One helped us down the line better understand who may be a better fit for a donor right? Like, if we had chase someone who has this has literally been set to meet well, power contacts, but I think could have definitely been sent to me here. Right? 

It's like, why would I ever give money to you as a student founder, or assume fund when I know that I can invest in a p from and there's value because there's a higher confidence in a high return on investment and that hurts. 

But if you don't go out and test your idea, before you go on fundraising, you won't have a good answer to that. You know, so, like one making sure that you really test your idea with again the inside do those experts before you go on. 

Fundraise was really critical because I think we literally have a running list of, like, I think you that people would ask on every call. 

And we were ready,
you know,
so I would say whether you're founder, whether you're tested with people, you aren't asking for money first, 
because they're gonna probably asked a really good question that second once we kinda did that testing phase. 

Right? 

Not just to get critique, 

not just to get those Vicky, 

but also to truly hone down on the what here we found that we were able to really redefine, 

like, 

our mission, 

our pitch, 

et cetera and really curious, 

which means that we had a very clear vision for who an ideal. 

Slash donor would be someone who genuinely, you know, believes and sort of these grants being able to, like, move the needle. Someone who has a background in either entrepreneurship VC tech, etc. 

We found that it was really important. Actually, that when you go out is sometimes you don't even know who the perfect person is in terms of, like, being a donor. 

But we typically ask for, like, hey, you know, we would love to sort of share our idea with you and get feedback. And, like, we generally did it to get feedback in the beginning stages but what we found was, as we continue to refine it. 

If someone really resonate with our mission, like, more times. And we asked people for money people offered, like, how can I be helpful? Like, I would love to financially contribute to that and that was probably the most exciting thing ever. Never in my life. 

I've fundraise for a lot of things, but never in my life. Had people literally been like, I love what you're doing. 

I want to get to this and so I think that goes back to again,
how many really clear vision that we will a stress test with a lot of people having excellent, you know,
examples having,
in my opinion,
I think a fantastic new team,
who is just able to speak really clearly convey the energy and passion of resume.
Yeah. And so you have more people. 

Money then we ask, would you be willing to financially contribute? Of course, I think that my sort of way of raising, and sort of my Co founders would agree right? 
It's like to ask for feedback first, because I think that you do that conversation, like, you know, you know, if they're like gung H* about this or, you know, they're not doing about it. And if they're not gung H* about it. 

And if you realize that their personal mission doesn't align with what you view racing for I purchasing the better question to ask is not, would you be interested in financially giving, or contributing or whatever? 

But,
like,
hey,
these are some, you know, 

who you think we should talk to we actually had a lot of success with that as well because some people were awesome and, 

like,
and I have a lot of good sort of feedback just didn't resonate with them. 

But they're friends with their colleagues, or they need a professional setting. They're like, wait, this person really resonates would really resonate with your message. So you should talk to them. And so I think those are actually the most successful ways that we went around fundraising. 

Of course look again, I'll back up. Right? Like, I mean, this was for a nonprofit VC. It was very much, sort of like a alumni focused alumni based, but hopefully a lot of those learnings can be transferable to anyone fundraising. 

Right, yeah, it definitely can be transferable. Especially the, I think having a list of frequently asked questions is just perfect for pretty much any fundraising process. 

So,
my question is, 

how much time do you take you to create that epic list to gather the essential feedback from the very first people, 

you know,
to really polish out your mission statement and your views, et cetera,
et cetera how long basically,
the preparations to fundraising take to honestly,
we started this in March and by,
like, 
may June we were fundraising, so it was really fast again. 

Right? Because during this, like, world of where you can have a had a couple hours of class a day, this is this took up our free, this nine free time. 

This took up any time that wasn't school for us because it was all remote. And that's the thing. My biggest learning from this time itself. People are so willing to talk to you, because they don't have to travel anywhere. 

You don't have to arrange to come to their office. People are so willing to talk and so I think we were able to really narrow down that timeline. 

Right, yeah, that's that's true right now is a good time to talk to people, because you can just and you're talking to a person who clicked the button and you're there. 

But, anyways, now, let's, we're coming up to the last two question of this episodes and the first one is, what's your advice to early stage? Founders? You know, those who prospects you'd adventures are funding. 

So those who are Pre product, Pre revenue, maybe not in Princeton, but generally those early stage startup founders. Yeah. You know, this advice is actually going to go back to the class. 

I took my freshman year called the f word failure. And that's what I would say is really think deeply about what your haters are, your critics we're gonna say, and where you as a company can fail. 

Because I think we as founders right? The ones who are the most successful, I would argue are the most optimistic. We see that victory visit and we're like, we can do it. That's awesome. Keep up the optimism. 

But I also think with that optimistic, entrepreneurial spirit comes and need to think really critically about, like, what are the potential hurdles? 

Because you need to know one what people sort of like people who you're talking to customers, investors, et cetera. Like, what are their anxieties? And giving me money and sort of committing to you as a product as a team, right? Like. 

You need to know that, and you need to show that you are the best team to sort of overcome any of those hurdles. So so that's my biggest advice is no, where you can fail know where people might sort of be less confident. 

And you, as a team as a product as a vision, and make sure you address that there's put them on here. I think you, you know, you should, you should never be asked the question that you don't have an answer to as a founder. I think maybe it's a big statement. 

You should have thought that's a good thing. 

I think, I mean, most of these are pretty much repetitive of their way of thinking is I'm not insulting, like, hundred plus of my previous speakers now, but they have a similar way of thinking about the problems with the search. 

So I think that's not such a big statement, you know, you have to be ready for pretty much any equation that you're going to get. Because those questions are really similar so definitely. Take your time to do that great advice. And we're moving on to the last question of this episode, which is a call to action. 
What's the one thing that was the least hard to do? As soon as the episode was over. 
What is the one thing that I want the listener to do? As soon as episode is over from most of the listeners are interest fundraising either for the startup or for their own fund correct? Yes. For their startups. 

I think I have like, one, maybe two percent of vc's, but those are not most of my wafers. 

Yeah, I think what you okay, that's sort of advice for the listeners, right? After this is gonna be really hard, gonna be a hit to the ego. Trust me. 

It was for us and we did it pull out a sheet of notebook, paper, open a Google, Doc, and just write down all the ways. You can fail just like right now take like, ten minutes and just stream of conscious. Here are here's every single way. 

I could potentially fail and then go to go back and like, your favorite color and all the ways. You can mitigate those risks all the responses that you would have any one who questions you on that. 

That's probably my biggest sort of call to action. Right now is make sure that,
you know, 

exactly where those failure points can happen and that you were actively sort of thinking about it that if you if that word happened to this hurdles were to come up what you would do about it and just you kind of, 

you know, 

are realistic and how those answers ready to go and are risking it. 

Right? 

Right, yeah, that's a perfect cultivation. And he's just ten minutes, so perfectly fits the criteria of the call to action and Michael to actually be promoting a yield book. 

So, not, for instance, the CEO, I wanted to give a shout out to the lady who helped us out a lot with our previous event called. 

Students started bell I remember that and she recently wrote a book about deals women's leadership initiatives specifically at yield. So, if you want to check it out, I think it's coming out in, like, a few days. 

I'll leave a link to the book and descriptions this episode. I'm not one hundred percent. Sure. If that link will give you any sort of discount, but hopefully does, you'll have to check. But anyways, if you're curious about he'll and specifically female entrepreneurship, that's big for you. 

So go out check out the description to this episode. I will also leave a couple of links to a uses publications, which I personally found really interesting and, of course, to the prospects human Ventures and have a good day.