Exclusive: Student-led venture fund launches at American University

Students at a DC university can now get first-hand experience investing in venture capital without needing to land an internship or high-barrier job. 

American University (AU) developed its own $150,000 fund that students completely manage, focused on pre-seed and seed startups, the school announced Tuesday. The Eagle Venture Seed Fund, with a goal to raise $250,000, will focus on innovative technology like artificial intelligence and will look to invest in local startups in the DMV, per Sophia Sabbagh, a co-director of the fund. 

Sabbagh, a master’s student studying sustainability management who has an undergraduate degree in business from AU, eventually wants to start her own fund dedicated to cleantech. That passion of her own, and her professors’ dedication, influenced her to be a part of the fund. 

“They are so knowledgeable and enthusiastic, and they really encourage us to learn and interact and participate in entrepreneurship on a hands-on level. That was one of the reasons when I found out about this,” Sabbagh told Technical.ly, “I was 100% on board.”

This isn’t the only student-led initiative in venture capital in higher education. The Dorm Room Fund is a network of students investing and starting companies, for example. New York University, the University of Texas and Duke University also have their own funds for students to get investment experience. 

Tommy White, an executive in residence at the Kogod School of Business at AU and an angel investor, had the idea to start a student-led fund to teach students about the financial side of entrepreneurship. 

He sees the resulting fund, which is a separate LLC within AU, a “natural extension” of the work done at the Veloric Center for Entrepreneurship within the business school. 

“What can we do more in the world of venture capital? Our students are eating it up. They really want more on this,” White told Technical.ly. “They want to explore more — just the venture capital aspect of a business, and also maybe think of it as a career opportunity.”

AU’s fund will not be leading investment rounds, and each deal will range between $3,000 to $10,000, per White. Many of the donors to the fund were alumni, and are entrepreneurs or venture capitalists themselves. AU’s treasury department will sign off on all deals, as well.

The goal is to make two investments by May, per co-director Hassan Gad, a master’s student pursuing a business administration degree. He’s also bringing previous venture capital experience to the fund — while earning his degree, he’s also a senior investment associate at Openner.vc, a fund in DC focusing on early-stage tech companies in the Middle East and Africa. 

The fund’s leads hope for successful exits and profitable investments, but they also aspire that this will push more students to pursue venture capital as a career. 

“I feel like what AU is doing right now will directly lead to more students coming out of the institution, going into VC and going to private money,” Gad told Technical.ly. “Being a part of that means a lot to me on a personal level.”

How it works and how to get involved

There are 11 people on the team that makes up the student seed fund, including the co-directors and investment analysts. It’ll oscillate between 8 and 12 people per semester, per White, depending on applications received. 

For students to qualify, they need to have participated in Venture Capital Investment Competition, which brings together more than 100 colleges at UNC Chappel Hill on an annual basis to simulate the venture capital process. 

Students involved in the fund will put together investment theses about firms, backing up why the fund should invest in said company.

Co-director Sabbagh stressed it’ll be a group effort. 

“The point of the seed fund is for everybody to learn,” she said. 

The startups will also receive mentorship, where the students will pull from their networks from internships, jobs and academia. 

“Continuously utilizing that knowledge network is so important, and it doesn’t just help us as a fund grow our expertise and our ability to pick unicorn startups,” she explained, “but it also allows us to contribute to startups in a more meaningful way and actually provide something more than just a written check.”

The seed fund’s leadership will also work with “partner organizations” like accelerators, incubators and angel investment groups, though White declined to name those groups because deals are not final. 

White has an active role in the fund as it’s getting started, but eventually wants to step back further and have a minor role as an advisor. 

“[I] really want this to be something that students can be proud of,” White said, “and can be really feeling like they have a lot of ownership over.”