Challenges Student Entrepreneurs Face when Raising Seed Capital

By Sylvie Beauvais

Student entrepreneurs face specific hurdles particular to their dual status (as company founders and full-time students) when it comes to raising seed capital for their startups.  Here are some reflections from several Wharton graduate students/recent alums, Samir Malik, founder of 1DocWay and dual degree MBA and Master of Biotechnology (Class of 2013), Steve Lau, co-founder of  and Wharton MBA  (Class of 2013), and Austin Neudecker, Wharton MBA (Class of 2012).


  • Being a student also can signal to an investor that you have a lot of energy and that you are good at juggling multiple responsibilities and handling limited direction.
  • You have the ability to be more frugal and can make money last longer. i.e. you don’t have to pay yourself a salary while you are a student.
  • You are in a position to leverage professors in areas of expertise that are core to your business.
  • The reputation of the school carries some weight.
  • Your access to investors is great as a student. “Through treks, my positions in clubs, ISP projects, etc. I was able to talk to top level investors at ~40 great firms over my time at Wharton.”


  • School can be a hamper because investors would like to see a full-time commitment from the entrepreneurs they invest in.
  • From the investor’s perspective, graduate business school can be seen as a risk aversion technique for young professionals, which may not match the mental image of the “entrepreneur.”
  • VCs and angels have (highly rational) doubt about your devotion to the idea.  Many student entrepreneurs are willing to try concepts while they attend school (as they didn’t plan to take a salary anyway).  So many students foolishly admit (or imply) that they are testing the concept, and if they raise money before they graduate, they will go for it.  In investors’ minds – that’s not acceptable.  You must display your commitment to pursue the venture regardless of funding and they’ll often wait until graduation time to seriously consider the investment.
  •  Being a student is a clear distraction as you cannot spend 100% of your time and mind-share on the startup.
  • There is less perceived ‘urgency’ in your fundraising timeline as you are still a student.

There’s another factor: a student’s experience is often mitigated by the startup’s industry focus.  As Ashish Patil, Founder ARE 5 Apparel (in our Venture Initiation Program) and Master’s Student in the Executive Master’s in Technology Management (EMTM) program (Class of 2014), puts it:

“I’m working on my second startup, ARE 5 Apparel. Previously, I had a medical device startup. There’s a big difference in how me being a young student has been perceived. I’ve been relatively accepted as an entrepreneur in the apparel industry, despite having no direct experience. I think it’s the value of having a close connection to the target demographic and showing you are able to pick up industry nuances. Opportunities for seed funding have been discussed with us three months into the venture. However, I’m doing my best to grow organically and be self-sufficient, as this industry allows for that to a higher degree.

On the flip side, my medical device company (Medivity) took a longer time to get any traction. I was finding most medical device entrepreneurs started their first company after learning the ropes for a significant time in their healthcare discipline. It was difficult for us to convince investors and other decision makers to take our technology and venture seriously due to our lack of experience. In that situation, my team and I focused on aligning ourselves with experienced advisers and physicians to bring validity to the opportunity. With a stronger supporting cast, we were accepted into an incubator with a research grant and eventually had larger medical device companies evaluating our technology.”

So the question becomes, what are the ways students can increase investor confidence in them despite their student status?

Both Samir and Steve, ultimately, agree that as a student you have to be willing to discuss dropping out. There are compelling reasons to stay at school and complete your degree (as previously discussed here), but this needs to be balanced with your growing business’s needs.

Steve Lau reports that over the summer he and his co-founder Jon Dussel, MBA Student (Class of 2013), spoke with eight angel / seed investors. He felt that overall being a student in the position of fundraising was more of a negative than a positive, and others have agreed that on balance, it is a slightly more difficult sell to investors.

Steve suggests three strategies for delicate fundraising discussions with investors:

  1. Communicate that while you are in school you can still allocate a full workweek to the business.
  2. Convince them [the investors] that the school is providing you with considerable resources that are core to the startup’s success.
  3. Indicate that you are willing to do what is best for the business, including dropping out if necessary.

According to Jon, “We’ve seen two minds on this split ~ evenly (from angels).  Some are adamant about dropping out and being 100%, while others see staying in school as a good way to extend our burn rate.  I think it depends on their school experience and what they think they could or could not have accomplished while at school.”

According to Venture Initiation Program alum Mike Kijewski, Wharton MBA (Class of 2012), “I would say it made raising capital only slightly harder. Had I just graduated, and been able to spend 100% of my time on the company, more investors would have been likely to invest. But the traction we were able to get with customers while I was in school helped our investors feel a lot more comfortable about investing in a company run by a current MBA student.”