Startups at Harvard: Lessons from The $10k Innovation Fund
By Asher Noel
The American Dream has long been to go from nothing to something. Now, that something is often portrayed in culture as a unicorn: a startup that finds so much success that its valuation surpasses $1B USD. The entertainment industry typically portrays the journey as one with explosive energy, where founders realize staggering levels of success on even more staggering timescales. But the narrative is rarely this rosy. Starting a venture is hard.
Founders need help. Over the Spring 2020 semester, I tried to provide some of that help both by collaborating to grant a $10k Innovation Fund and by sourcing startups as a part of Harvard Undergraduate Capital Partners (HUCP). In the process, I saw over 100 startups, awarded grant money to 7, and learned a little about what it means to find startup success at Harvard.
What happened?
This past April, HUCP awarded $10k in non-dilutive grants to 7 Harvard startups of the 97 that applied. The team evaluated startups using a combination of qualitative and quantitative measures along axes of team strength, potential impact of the grant, HUCP fit, market opportunity, non-profit status, and financial viability. Beyond the Innovation Fund, HUCP has sourced 200+ Harvard and MIT startups over the past two years.
What did the startups look like?
Start-ups involved with both the Innovation Fund and the normal sourcing process generally originated at Harvard Business School and were led by men. Nearly 80% for both pools of start-ups applied some form of technology, and 55% of the Innovation Fund applicants mentioned the word “platform” at least once in their application.
How did we evaluate startups?
Quantifying indicators of startup success is notoriously difficult, but we tried. To start, we thought about advice that we had received from investors, but advice varied greatly.
Some Seed investors posited that market-sizing only constitutes at most 20% of their quantitative reports; others told us that they regularly cut startups if the total accessible market is less than $1B USD. One investor passed on Scale.ai during Y-Combinator because they had yet to gain traction; another early-stage investor regularly invests in people and an idea. But across the board, early-stage investors seemed to most heavily weigh the team’s technical and startup experience. All of this informed how we evaluated about applicants.
We asked startups: Would you be consumers? What relevant experience do you have in this industry, the entrepreneurship space, or the skills needed to launch their particular startup? Are you a critical and honest expert on your competitors?
What does this show about entrepreneurship at Harvard?
It is dominated by the Business School.
Of the 97 teams that applied to the Innovation Fund, about half were from the business school. This is consistent with data from Pitchbook: In the period from 2006 to 2017, VC-backed Harvard MBA founders numbered 1,203, 400 more than any other school. In contrast, VC-backed Harvard College founders only numbered 844, ranking fourth behind Stanford, Berkeley, and MIT.
This likely is in part due to the difference in career risk between founding in college and in Business school. For any college student, pursuing a startup that fails instead of a popular and lucrative career could incur a $1M opportunity cost. For Harvard students who seem to be more risk averse than students at comparable schools, the risk proposition of starting a startup seems all the more unpalatable. In contrast, MBA students already the security of having successfully started a career before enrolling. Altogether,
Harvard’s startup ecosystem is improving, but it exists in a saturated market. Budding college founders may be wooed by Harvard’s increased commitment to technology, incubation programs, and investor relationships, but they may just as easily be enamored by one of the other career paths that vies for their attention.
Yet somehow Bill Gates, Mark Zuckerberg, and thousands more found their stride. It is too early to tell with the Innovation Fund, but we can only hope that HUCP is helping new generations of founders find theirs.