“When is the best time to plant a tree? Twenty years ago. The second-best time is today.” - Chinese proverb
When I first heard this proverb from one of my friends at Princeton, I understood the meaning, but I did not realize the meaning until much later. This summer, I interned for a venture capital firm in Tulsa, OK. I found Atento Capital through one of the Center for Career Development’s career fairs, and I decided to take a chance. My last blog talks about the value of taking a chance on a small city, so I won’t repeat myself here. What I will do, however, is talk about one of the biggest lessons I learned: the time to startup is now.
Being that Atento’s investment range is pre-seed and seed stage startup companies, I was exposed to the early life of many startups. From firsthand experience, I can say that it is a tough journey starting out. The venture capital world relies on a power rule in order to make money. For example, a firm may hear from thousands of companies, whittle it down to being interested in one hundred, and then investing in ten. Of those ten companies, half will fail, two or three will break even, one may slightly exceed the investment, and one may be a ‘home run’ which yields significant returns. It is a super volatile industry.
In the pivotal moments of a startup's early life, managing money is super important. Having time to deliver on a plan is the second battle, or in other words, managing what is called burn/runway. This is essentially how much time you have left before you run out of money in the bank. There are a variety of factors that influence this, which can become complicated to manage. Failure to do so oftentimes results in the end of the company or the need to raise more capital and lose ownership. This is why the time to make a startup is in college.
There are numerous benefits to starting a startup while in college. First off, The risk of failure is insignificant compared to the consequences if taken outside of college. While you are in school, the worst thing that can happen is your startup fails, you have more freetime on campus, and you learn a few lessons along the way. Perhaps an oversimplification, but while in college, you are in a protected bubble of opportunity. The present talent at school serves as a base to launch a project that can turn into something amazing. What other time will you be surrounded by hundreds of bright individuals within arms reach? On top of this, the entrepreneurial ecosystem at Princeton (and other schools) is very strong. The support is unmatched.
Additionally, pitch competitions often give non dilutive funding/grants to groups who perform the best - this is not something that happens outside of college; if someone gives you money, they expect returns. The worst part of raising funds for your startup is giving part of your business away, so why not take advantage of opportunities where that does not happen. In short, the best time to take a risk on a good idea and found a startup is in the nest of opportunity known as college! Facebook was founded twenty years ago at Harvard, the next ‘Facebook’ startup will be founded today, at Princeton. It's time to startup!
