Catch 'em Young: The Rising Confidence Of Investors In Student-Led Startups College students are known for their fresh perspectives, innovative thinking, and hunger for success, say investors

As India's startup ecosystem evolves, we see more and more investors backing college students. The success stories of Postman, Zepto and a few others have encouraged many investors to take note of the potential and disruptive power that student-led startups possess. For instance, Postman was started by Abhinav Asthana as a side project to solve a specific problem. It then set out to create a tool that would simplify the API testing process and in 2021, it became the most valued Indian SaaS startup after $225Mn funding.

We also have many global success stories of student-led businesses such as Yahoo, Meta and Reddit. Launched by Stanford students David Filo and Jerry Yang Yahoo was a catalog of other sites. But in no time, it became the second most popular search system in the world. The popular website Reddit was also created as a website of social news back in 2005 by Alexis Ohanian and Steve Huffman, both graduates of Virginia University.

The icing on the cake is Google, which was actually founded by Sergey Brin and Larry Page in 1998 when they were still studying at the University of Stanford. According to news reports, they even had a hard time maintaining the balance between the startup and their studies. They even reportedly tried to sell Google for 1 million USD, but the potential buyer resigned from the deal.

Coming back to the Indian scenario, besides a few success stories, what is leading to this confidence? We ask experts.

Why are investors backing student-led startups?

Experts say this trend of backing students is led by increased awareness and interest in cutting-edge technologies in students. "Indian students are now playing a pivotal role in the tech revolution in India. With more and more students upskilling themselves in areas outside of the college curriculum, the Indian student community has become very agile in terms of end-output delivery. The rise of student forums scoped by topic (such as AI) has drastically shortened the learning curve for these students," said Nitya Agarwal, VP, investments, 3one4 Capital.

College students are also known for their fresh perspectives, innovative thinking, and hunger for success. "Students possess a unique blend of creativity, adaptability, and exposure to cutting-edge technologies, enabling them to identify emerging market opportunities. Their ability to think outside the box and challenge traditional norms add value to their startups," said Madhukar Bhardwaj, principal, Physis Capital, the venture capital arm of Inflection Point Ventures.

The firm has invested in a few student-led startups such as InsideFPV, Urban Matrix, Density, Streak and Pear.

Investors also recognize that these startups often have access to university resources like research facilities, laboratories, and intellectual property which can provide a competitive edge and enhance the potential for long-term success. "Investing in college startups offers venture capitalists an opportunity to get involved at an early stage, increasing the potential for significant returns. While college entrepreneurs may have limited industry experience, they compensate for it with their drive, ambition, and the ability to quickly learn and adapt," adds Bhardwaj.

Venture Capital Firm 100X.VC says it invests in student-led startups, not because they are student-led, but because they are good businesses in general. "This is directly because young, fresh founders have a unique worldview that enables them to solve problems with innovative products & solutions," said Vatsal Kanakiya, principal and CTO, 100X.VC.

Kanakiya also shared that there are two kinds of student entrepreneurs. Founders like those of Bluelearn, who were solving their own itch. They built India's largest community of students, and enable them to get access to work and learning opportunities regardless of background. A problem they themselves understood. On the other hand, the founders of Bugbase and Datasutram were solving problems for large enterprises. "Instinct says they would understand little about enterprises out of college, but here they came and upended the models," he said.

100X.VC has invested in many student-led startups since Class 01. Its first student investments were in Datasutram and Pocketly - both right out of college. 100X has invested in 26 startups that are led by students, including dropouts, 18-year-olds, and students who are on the verge of graduating. Some names include Accio Robotics, Pocketly, Avair Sense, Bluelearn, Bugbase, ZuAI, Zing, Utsav, Plug.Money, and more.

Student founders also tend to have the ideal qualities investors look for in early-stage founders. "They are lean, they are flexible and growth-minded. They are agile in their decisions and absorb information like sponges. They come with 0 biases, and are shaped by the entrepreneurial ecosystem," said Kanakiya.

Richa Bajpai, founder, Campus Fund, which has invested in student-led startups such as Parksmart, HealthySure, We360, Plutus, D-Nome, Greengrahi, Zeuron.ai, Sama, among others, sums up three major factors instilling confidence among the investors:

1. Entrepreneurial Potential: College students often possess the ability to think beyond convention, the courage to challenge the status quo and a strong drive to create a difference.
2. Technological Proficiency: Today's college students are digital natives who have grown up in an era of rapid technological advancements. They are often well-versed in emerging technologies, such as artificial intelligence, blockchain, and machine learning. Investors recognize that this technological proficiency gives students a competitive edge in creating businesses that can leverage these technologies to drive growth and innovation.
3. Access to Information and Resources: Colleges and universities are continuously evolving providing students with a wealth of resources, including research facilities, mentorship programs, and entrepreneurship centers that have reduced the gap between the generations.