Structural Issues With Penn’s Startup Ecosystem, And How To Fix Them

Lately I’ve been obsessed with understanding structures and networks. Why things are the way they are, and what role they play in the larger picture.

This past school year I have had the honor of expanding Rough Draft Ventures to Penn’s campus with the full support of the General Catalyst team. As we have been working to back great student founders, I wanted to take a step back and look at Penn’s startup ecosystem as a whole.

Before I start my critique on this subject I want to say that these opinions are my own, and are shared in the hopes of improving our resources. The University of Pennsylvania is one of the best places to be as a student entrepreneur, and there are so many resources to help curious students. However, we must remain objective and not allow our assumptions of Penn’s resources and how they operate be perceived as fact, as we all set out to improve our community.

What Are The Resources?

The good news is that we have an extremely healthy amount of resources at Penn fostering entrepreneurship. Academic courses such as MGMT 231 (venture initiation) where you work on your startup for the entire semester and receive credit, EAS545 (engineering entrepreneurship), and the computer science department. Campus Organizations such as Weiss Tech House, Founders Club, Wharton Innovation & Design, and more.

There are competitions that force founders to really think critically about what they are building. Some of these include Penn-Wharton Startup Challenge, Pennvention, PennApps, Hult Prize, and more.

A number of incubators and accelerator programs geared towards educating and connecting founders to valuable resources. Some of these include Wharton VIP, PennApps, Weiss Labs, and more. There are also a few innovation funds that provide light capital like Penn-Wharton Innovation Fund, Weiss Tech House Innovation Fund, and the M&T Fund.

Finally when you are looking to raise that pre-seed/seed round there are Penn specific funds like Red and Blue Ventures to help you, Philadelphia based firms, and of course Rough Draft Ventures.

Understanding Our Roles

When every group acts in the same manner without the same means, we start to limit our benefit to student entrepreneurs.

It is critical that Penn’s resources understand the value they bring to our startup ecosystem as well as the individual student entrepreneur. Without this understanding, we are continually stepping on toes and not cultivating the best student experience. Instead, what we are already seeing, are very strong student entrepreneurs taking advantage of all of the resources available (because they are the strongest candidates) and curious students watching on the side. Why is this?

EVERYONE LIKES TO HAVE MONEY FOR THINGS

It really is that simple. This brings up a serious problem. What happens when you have to compare an experienced student founder that wants $1,000 for their venture with a built product and traction vs. a new student founder looking for $1,000 to iterate on an mvp hardware product. The lightweight software with a little bit of traction wins, and the mvp hardware misses out.

I believe that if we structure our resources to have a specified role in the overall startup ecosystem, we will see far more students getting serious funding behind their work. I will explore this deeper further down.

(Sidebar) Cross Pollinate

Penn is home to one of the best business schools in the world (definitely the best undergraduate business school *wink*), a top tier engineering school, and amazing dual degree programs that facilitate cross-sectional study.

However, a consistent problem that potential founders face is finding a partner in Engineering or Wharton to build their idea with. This lack of interaction shouldn’t be happening in a university network in which students from all studies are passing each other everyday.

Outside of one off “innovation mixers” we are not getting these talented students together in a collaborative manner. This immediately limits our community’s potential.

Stop Pretending To Be A VC

I want to challenge this pattern that every resource wants to act as a mini-VC firm on campus.

This point ties back to resources understanding their role in the ecosystem.

The multiple innovation funds across campus shouldn’t act as mini-VC firms because it creates structural barriers for passionate students, before they can even explore the capabilities of what they are trying to build. These innovation funds on campus should be giving $1,000 checks to almost anyone that wants to build a product. Obviously there needs to be checks-and-balances in place so that the system isn’t being abused. However, considering we know there isn’t a return to be made with this investment, take it for what it is. A catalyst to propel those that may need minimal capital to get an MVP off the ground.

So, stop trying to figure out if the team is right. How dedicated they are to this specific idea (products are iterative). If this is going to be their focus this summer. That isn’t your job. That’s later down the funnel. Below I propose what the proper funnel should be for our startup ecosystem.

In between each one of these sections, student startups will fail. That’s the nature of building companies.

A product isn’t as useful as you first thought. The traction simply isn’t happening. Facebook just rolled out what you were building, but better.

The point is that they were able to come to this realization while building what they believed in. Not standing on the sidelines.

I am not suggesting every student entrepreneur go through each of these steps. There are incredibly talented students that can build a product for a couple of months, get some traction and they are ready to pitch to Rough Draft (if you are one of those entrepreneurs, email me). However, for the students that don’t fall into that bucket, we need to design a process that encourages and educates those looking to build their idea.

Solution

I propose that we develop an umbrella organization that holds Penn’s entrepreneurial efforts. Increasing communication across groups. Delivering a deeper understanding of the resources available to curious students. And giving structure to a very chaotic network of resources.

Ideally, with this umbrella organization would come a central hub for all aspiring student entrepreneurs and product builders. To allow for the cross pollination between schools, and the matchmaking of founding teams.

All of us should be encouraging young founders to build their ideas and test their assumptions. From the earliest stages without funding, and structuring subsequent funding for founders to reach achievable goals. Working together to integrate our resources, in the hopes that we create strong cohorts of young founders and early employees. Obviously we want our investments to go to good use, but let’s focus on funding passionate individuals and their ideas, not creating liquidity.

If you have any suggestions, feel free to reach out to me. I appreciate any input you may have. And if you feel passionate about building this umbrella organization, please let me know! Thank you for reading.