Dorm Room Fund’s Melissa Li talks about discovering hidden gems & investing in student startup founders across universities in the US

[KoreaTechDesk] Dorm Room Fund’s Melissa Li talks about discovering hidden gems & investing in student startup founders across universities in the US

Melissa Li is a Gen Z tech investor, startup mentor, speaker, and student at Harvard College in the US. She is passionate about growing information and network access for underrepresented and up-and-coming young founders. 

Melissa is Head of Community and Managing Partner at Dorm Room Fund (DRF), the original student-run venture fund started by leading US seed-stage firm First Round Capital. In her steering role at DRF Headquarters, Melissa leads the delivery of founder support and new platform offerings designed to help founders reach their next milestone confidently, as well as spearheading DRF’s wholesale university engagement efforts. Dorm Room Fund’s industry-agnostic investment portfolio has raised $2.5B+ in follow-on capital and captured $8.3B+ in value. 

Outside of DRF, Melissa has advised founders on organic community growth for the Gen Z consumer. As a frequent speaker and workshop lead, she has delivered education that demystifies the world of VC funding for young entrepreneurs in emerging tech hub cities. Melissa is an active mentor to selective founder accelerators, including Founder Institute, the DayOne Fellowship, the Blackstone Launchpad Fellowship, and Washington Technology Industry Association’s Korean Accelerator (focused on Korean startup expansion into US markets). recently caught up with Melissa Li at TechCrunch Disrupt 2022 in San Francisco, where she spoke at a roundtable about the US university entrepreneurship ecosystem. Here, Melissa shares more about Dorm Room Fund and her role as a community-builder, why she’s bullish on student founders, and her advice for how universities can upgrade entrepreneurial education to foster more diversity in tech.

Tell us about Dorm Room Fund and your role there. 

I am the head of community and managing partner at Dorm Room Fund, a pre-seed fund focused on backing the strongest entrepreneurial talent from universities across the United States. We were originally started by First Round Capital, the leading seed-stage firm, in 2012. So we’re the first pre-seed student-run fund credited with pioneering this model. In recent years, especially in Europe, we’ve seen similar student-run venture fund models pop up too. 

For Dorm Room Fund it’s been ten years of backing incredible founders. We’re proud to say that we have a good eye for spotting great founder talent; to date, we have supported over 200 companies, which have created more than $ 8.3 billion in value and raised more than $ 2.5 billion in follow-on capital. So we’re proud of our portfolio, where we’ve previously invested. Part of this is a people bet – betting on the best university talent and entrepreneurs. 

Does Dorm Room Fund have a similar model to Y Combinator or Techstars, when sourcing and selecting startup founders? 

We are different from YC and Techstars – we’re not an accelerator, we are a pre-seed fund in the traditional sense of the word. We don’t just rely on in-network deals; we evaluate written applications from all types of founders via our website, but we will also go out proactively and source. We are interested in identifying and partnering with the best student founder talent.

We’ll go through a process of internal review made up of coffee chats and a pitch before our investment committees, staffed solely by our student teams. Our pre-seed check comes with a commitment to helping founders think about scaling and hiring and essentially getting to their next milestone knowing we’re cheering them on. 

Please elaborate on the various things that you and the Dorm Room Fund team do to help startup founders achieve growth.

We have an inbuilt HQ team. We’re essentially operators in residence helping companies approach growth and their other needs. For example, in my role as head of community, I do a lot of helping companies through one-on-one sessions, about what it means to build an organic audience, leverage customer love, and scale up through the power of community flywheels. Community-building is a buzzword in the startup world at the moment, but it’s challenging because founders have to get scrappy in the early days. You need traction to fundraise, but on the other hand it’s tough to prove traction without money in the bank, so you have to get creative. And so I advise startups one-on-one on creative marketing and growing their early adopter bases at Dorm Room Fund.  

Some of the other things I do as the head of community are launching community-centric initiatives, specifically the platform side of the fund that serves our founders post-investment. So, for example, I led the launch of our hiring network to ensure that our portfolio companies are getting connected with technical talent, which can take time to come by, especially if you’re building something quite niche. 

Dorm Room Fund has been around for a decade, which means we’ve been able to harness our brand and build a strong following in the university entrepreneurship space. So I’ve also led the launch of the early adopters club, connecting our portfolio companies with Dorm Room Fund’s Gen Z audience for product and brand insights. And that’s a really special part of our community. It is people in college and Gen Z consumers who follow us, and it just means that we can leverage that to do remarkable things. 

As for me, I’m passionate about Gen Z consumers as well. I’ve done a number of speaking engagements about the hidden superpower of Gen Z to consumer brands as often the strongest and most vocal consumers. I’m bullish on investing along the behavioral trends of this generation.

But yeah, we’re involved investors. We want to be there supporting founders through the highs and the lows. We’ve also built this brilliant ecosystem where we invest at the very earliest stages, and then we’ll rely on our extended community to get our companies to success and growth at the later stages. For example, we have a robust alumni community who are now partners at Sequoia, Bessemer, and Andreessen Horowitz. 

What is the total fund size of the Dorm Room Fund, and is there a specific investment size per deal?

We recently announced Fund IV in September 2022, which is a $ 12.5 million fund independent from First Round Capital. We’re fortunate to have some of the strongest and best-known investors in the industry backing us, including Forbes Midas List honorees. 

We write $40k checks at pre-seed. Of course, pre-seed rounds are getting larger and larger, so in the whole scheme of a fundraising round we are likely not the biggest investor. But we deliver outsized value because of our commitment to helping our founders throughout their journey, pre-seed or not.

Does Dorm Room Fund invest only in student founders? Why do you have a focus on student founders? 

We back companies with at least one student founder – so a university student of any degree level of type, or a recent graduate. We find that having interdisciplinary student teams is a superpower because of their complementary skills. School is one of those rare places where you get excellent exposure to people of different backgrounds. Also, there’s great value to campus networks where you can access professors or peers who want to help usually with no expectation of equity. 

I’m personally bullish on student founders because several amazing consumer companies got their start on campus. I talk about the power of community all the time, and campuses just are a unique microcosm of broader consumer behaviors. Outside of Dorm Room Fund, I’ve helped a number of consumer companies strategize campus ambassador programs, because campuses are an exceptional first testing ground and a place to pick up steam rapidly through social proof.  

When I think about startups that have used campuses as their flagship marketing strategy, many are household names. Snackpass, for example, is a Dorm Room Fund company. There’s also Bumble, the dating app, and Cash App, a massive consumer fintech in America. 

I spoke to this on the [TechCrunch] Disrupt roundtable too – nowhere else in society do you get a concentrated test group of Gen Z consumers all in the same place at once! You have the option of hosting activations and events for viral marketing purposes, a prime example of peer-to-peer marketing. For example, if it’s a fashion resale platform, try to do that on campus where second-hand peer-to-peer resale is a substantial behavioral trend already anyway. 

Is there a risk in dealing with student founders over experienced founders? They may sometimes graduate and pivot or give up or break the founding team. How do you mitigate the risk?  

We invest where we see founders have a true passion for the problems that they’re solving. It’s challenging for anybody to scale up a company. It’s massively time-consuming, stressful and filled with uncertainty, but a lot of this is offset by founders who almost have a personal calling to solve a problem and will be remarkably resilient no matter what. I said something along the same lines to the students at my [TechCrunch Disrupt] roundtable who were worried about balancing founder life with full time college.

I’ll also add that the longevity of a student-founded company is also a matter of executional ability, where founders have delivered on what they said they were going to do. They’ve shipped products quickly. They’ve been able to iterate rapidly. That shows they’ve taken the necessary steps to act upon the problem they’re so passionate about. 

While we invest in students, we regularly see teams that are student-led but with experienced operators in their midst. It’s this variety of experience levels that can make for a powerful combination. Student founders can be super bold because they’re tackling new markets with fresh eyes – whereas sometimes decades of working in that space might get people stuck in patterns of thinking. 

Do you invest in founders only from top universities or also engage with other schools?

I’m really glad you’re asking this question, because I’ve made a point to do a ton of work around democratizing venture funding knowledge for student entrepreneurs. It’s a big passion of mine. It was actually talking with dozens of entrepreneurship program managers at different college campuses and sharing ideas on program design that inspired my [TechCrunch Disrupt] roundtable topic. 

Of course, there are a number of schools that have very established brands as being strong at generating venture-backed startups. But Dorm Room Fund also has a real commitment to investing nationwide, because we firmly believe that student founder talent exists everywhere. I personally believe that the university you were accepted into as a high school senior doesn’t determine your ongoing ability as a founder down the line. 

I’ve also spent the past year speaking at university accelerators across the country in my own time. The ins and outs of venture capital can be inaccessible and shrouded in mystery for first-time student founders. So I’ve been very intentional around widening information access to questions like: what traction is typically required for pre-seed funding? How should founders begin their investor search? What are the goals of a good startup pitch? My goal has been to help students in emerging tech hub cities understand ‘venture scale’, which is something that comes with its own set of considerations.

What is your campus marketing strategy for Dorm Room Fund? How do you reach out to student founders?

From what I’ve learned, ‘venture scale’ businesses are sort of a newer phenomenon at some institutions. They have very robust curriculum and cocurricular initiatives for lifestyle businesses or research commercialization, and they do it excellently. But I think venture scale and high-growth tech startups are a different game. Sometimes it’s because there’s no long-established pipeline of alums who are specifically venture backed, and this means there are real information and network asymmetries in place.

It’s definitely something I try to solve for. So a big part of my community role at Dorm Room Fund has been to build relationships with a variety of universities, as an ecosystem partner who can support more venture education on campus no matter how early.

We do other ongoing initiatives too, to identify and resource students in the earliest stages of their company-building. We’ve traditionally supported campus pitch competitions as judges and mentors, for example. 

Where is the Dorm Room Fund team located, and do you have a strategy to where you invest?

On the investment side of our operations, we have four teams for San Francisco, Boston, New York and Philadelphia. But each team is regional, which means that they’ll look after states distributed around the US too. 

One thing I’ve been thinking a lot about is emerging tech hub cities and what part student venture funds can play in accelerating innovation – in the Midwest and South, for example. At the roundtable, I spoke about how universities can also do their bit to fix the regional asymmetry in venture funding. One of my suggestions to entrepreneurship educators was to develop strategic relationships with super connectors who have the value-add of knowing how to master the ecosystem and offer effective introductions. And these superconnectors can come from local venture funds, or campus-focused funds like Dorm Room Fund who operate nationally. We operate by community-first principles when it comes to founder support and our relationships are far-reaching. We likely have some sort of connection in virtually every region.

Any suggestions for university entrepreneurship educators and how they can diversify the student founder ecosystem?

Creating entrepreneurship communities with visible examples of peer role modeling is really powerful. To a certain extent, it’s about promoting different types of businesses on campus instead of just the high-tech ones that fit a mold. For instance, you don’t always have to build in web3 or AI to be an incredibly successful student founder. Sometimes collegiate pitch competitions end up judging on a narrow set of startup criteria, so what tends to win out is a predetermined type of profile. You know, all-male teams, or teams that may be all computer science students building in often misunderstood ‘techy’ spaces with lots of jargon. I think educators can do their part to redesign pitch competition formats such that other business types are encouraged too, because we know consumer businesses can be hugely successful. 

One area of lack is female founders, who are underfunded. This is such a shame because female founders know consumer psychology and purchasing behaviors firsthand. In the US, more than 80% of purchasing decisions are made by women. There’s a vast number of consumers who now aren’t being served or properly designed for in industries that benefit hugely from first-hand empathy, such as healthcare. 

It’s also creating safe spaces on campus to talk about things that aren’t just business building. Diverse founders have to put up with a lot, day to day! Peer group conversations about the uphill battle of getting funded and networked can be hugely validating for founders. And the community that comes from that can also encourage longer-term pursuits of entrepreneurship as university students. 

And lastly, what’s your advice for entrepreneurs, startup founders and student founders in Korea and Southeast Asia?

I really believe it’s an exciting time to be an entrepreneur in Southeast Asia and Asia in general! There’s a real boom of the internet economy and marketplaces, e-commerce, smartphone adoption and mobile apps, and consumer fintech popping up everywhere. There is no better time in history than now to be a student founder in Southeast Asia.

We’re at a point where information is truly accessible at your fingertips, and that wasn’t the case 20 years ago. Now you can connect with investors and advocates across the world over Zoom. You can recruit the very best distributed talent and work with them, without ever having met them in person. You can run your business almost entirely off low-code/no-code tools. I think it’s truly such a gold mine time in history to be building, and the venture capital markets will bounce back. I can’t be more excited to see the rise of student entrepreneurship in Korea and Southeast Asia. 

What’s your thoughts?












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