Rob McKnight, a managing partner of Boston’s investment team, joined Dorm Room Fund as a Harvard Business School student. For his undergraduate degree, he studied engineering at the University of Berkeley. In this interview, which has been edited for clarity, he shares the top mistakes and tricks he’s noticed in applicants to Dorm Room Fund.
“What you see in undergrads, without generalizing too much, is that they haven’t worked in the real world or are creating their first startup. For them, they want to have a good MVP,” McKnight said. “What happens with MBA students is that they have a better understanding of how to build companies, how a company is run, and more connections to investors, so they raise funds with more of an idea.”
What are the biggest mistakes you notice in student companies?
They don’t apply at all out of fear. We can identify if a company is a good fit for us in one or two conversations, and once three partners trust that it’s ready to go, we bring you in for a pitch. You’re not wasting our time with a 20-30 minute meeting. It benefits us because we get to see the company, and if it shows promise down the road, it’s easier for us to say, “Go work on this more, get customer traction, and come back to us in one or two months.” For us, that’s great because it’s a deal flow that comes in without us having to go find a new founder. Your company doesn’t need to be perfect to apply for funding. If it’s an idea on a sketching piece of paper, maybe you’re too early, but err on the side of applying than not applying.
In my experience at Harvard Business School, people are aware that Dorm Room Fund exists. This gets to my other point: you don’t need to talk to a partner or have a personal connection with someone at DRF. You can apply cold to the fund; we take tons of companies without personal contacts.
What types of pitches have most impressed you as a managing partner?
One of the things that stands out to me is the enthusiasm of the founders. They could have a great pitch deck and compelling numbers, but if they’re sitting there presenting it as if they were forced to narrate a book, it’s not a compelling story. It also raises questions: Does this person care about their idea? Do they have something to hide? We know there are ways to be creative with your pitch deck and make a story compelling, but it doesn’t tell anywhere near the whole story. Especially at this early stage, the people involved in the company are absolutely critical, so we need to see the conviction that the founders want to build a solution.
How do you gauge whether or not a team is a right fit?
If a founding team has a technical idea, it’s great to see that somebody has technical experience, but that’s not required. What we care about is the awareness of the skills they need and a plan to get those skills on the team. As somebody with a technical background, I have some concept of the difficulty that would be required to implement technical features, but if I look at the founding team, and they don’t mention anywhere in their pitch that they need to go out and find these rock star engineers, there’s a problem.
On the other side, they can have non-technical degrees but say we realize the amount of technical talent we’re going to need. Founders can show interest by saying that they’ve connected with people at all these different schools to find rock star engineers and already have a pipeline.
What types of companies do you see on the Boston team?
Any range of industries has been represented. We’ve seen dating apps, retail apps, virtual reality programs, and even a person doing space manufacturing. I don’t think there’s really any industry off the table. The main qualification and the big reason that we will not fund companies are that the idea doesn’t need venture funding or there’s the company that comes in, states what they’re working on, and you don’t think they need money to make a prototype. If a company can make revenue without additional funding, we ask, “What are we missing? Do the founders have plans with the VC funding that they’re not disclosing? Do they understand their problem well enough to realize they don’t need funding?”
What does DRF offer to an undergraduate vs. a graduate student?
On some levels, they offer the same exposure to undergrads and someone like me, who in undergrad spent no time in the investment space or working for early stage companies. When looking at venture capital as an industry for undergraduates and graduates, DRF offers the same value proposition with the exception that for MBAs, that’s more valuable.
It’s difficult for undergrads to make it in venture capital because the industry is not actually that big, and there are not that many jobs every year, and it’s largely based on personal connections. There’s no formal recruiting for jobs. Going into venture capital after an MBA is very much a path that a lot of people do take.
For people who are thinking about it, Dorm Room Fund is a great way to have a deeper understanding of the field, make connections with important people, and brush up on the important skills that will make you a valuable candidate for venture capital coming out. On top of that, the whole purpose of DRF is to fund these incredible companies, and we do a great job of that. So it’s basically serving both the investing side and the founders since we’re actually cutting checks and this doesn’t feel like another line on our resume.