Based on initiatives like Dorm Room Fund, this new initiative from tzvi.vc and Siftech is looking to tap into the creativity and innovation on Israeli campuses
Universities have always been hotbeds of revolution and innovation. Empires like Facebook have been born in dorm rooms, the collaborations of friends playing out their “what if we could really make it” dreams.
However, with less money to go around and investors opting for more experienced teams, turning these ideas from young entrepreneurs into reality can be trickier. This is where a new generation of venture funding initiatives can step in, providing some much needed cash and direction to student startups.
In hopes of replicating projects like the successful Dorm Room Fund (DRF) in the US, a Jerusalem native who was graduated from Harvard in 2015, has launched fresh.fund to help serve his home community.
Zaki Djemal is a young entrepreneur whose own startup received funding from DRF, and believes in the model of students helping other students reach their goals of building a company.
“The process was seamless, fast, friendly and empowering, and it gave us the confidence we needed to turn down the jobs we had lined up after graduation,” Djemal says of his team’s experience of pitching DRF and getting funding to start their business. “We had the incentive to dedicate ourselves full-time to our startup and take that invaluable leap at a crucial moment of opportunity in our professional lives.”
Having benefited from this opportunity as an entrepreneur in the US, he was surprised that there was no similar operation here in Israel, despite the active incubator scene on campuses. As it stands now, nearly all of the IP that is developed by researchers that are backed by their schools is owned by the universities as it is performed under their auspices, using their resources. While there is obviously a place for this model, it was felt by Djemal and his partners that perhaps there was an opportunity for a VC model to enter this scene, looking for ideas that were not born in the lab but in the dorm room as it were.
In looking to fill the gap, Djemal opted to establish his own fund, making small, super early stage investments of between $20,000 – $50,000 in student ventures. His goal of uncovering the untapped potential, and creating an environment that is more appropriate to the first time entrepreneur. This means that nascent companies can apply to fresh.fund without needing to have a ready pitch deck, and go through the grueling process of interviews with battle-hardened venture capitalists.
Djemal is joined by Hiday Goldsmith as the other fresh.fund founder. They have teamed up with Siftech, a non-profit which was founded 5 years ago by the Hebrew University Students’ Union, as the first startup accelerator in Jerusalem, that will absorb and help nurture the companies that are selected by the student board.
“Since the beginning, Siftech has been promoting and involved in activities that engage the student population in the city with the startup scene, and this project very much reflects our mission,” Siftech’s Managing Director Oded Barel-Sabag tells Geektime.
Of course none of this would move forward without the necessary capital, to which Jerusalem-based tzvi.vc – where Djemal is now employed as the manager of fresh.fund – has stepped up to provide. As it is set up, fresh.fund is a “daughter” fund belonging to tzvi.vc, managing the funds of the parent.
Preparing the next generation of investors
Good investors are built over time, and in the view of fresh.fund, there is no time like the present. The team here is taking a holistic approach to the project by not only empowering the entrepreneurs, but taking the opportunity to educate the future investors as well.
Building on the idea of students helping students, the initiative calls for a board of 15 students to undergo a two-month “investor crash course” that the fresh.fund tells Geektime is “designed to equip you with the basic tools you’ll need to identify investment opportunities and evaluate early-stage companies and learn about the venture creation process from the point of view of the investors.”
With the course in hand, the team will get on the job training in learning how to become an investor. Beyond this being an opportunity to work with many of the influential investors and other mentors in the Jerusalem scene to grow their network, Djemal writes that, “It’s a great jumping board for a career in investing or at a startup.”
Seeing as it is not their money being invested, the students on the board, whose members will be announced on December 25, will not be taking equity for themselves.
This team will then seek out ventures that primarily involve student founders in Jerusalem, although they make the point of saying that this will not be a hard limiting factor.
For more info on what this entails, check out this great post from the fresh.fund team on Medium.
In the spirit of creating opportunities for all of the city’s residents, Djemal tells Geektime that they are working with organizations including Tzofen to reach out to Arab-Israeli students as well.
“A diverse committee of student investors is more likely to catch opportunities led by peers from underrepresented communities faster and know more thoroughly how to gauge the true potential of those opportunities,” he says, adding that, “There is power in diversity that we hope to empower with a committee of student investors hailing from a variety of backgrounds and skill sets: Jews, Arabs, women, men, religions, secular, computer science, economics, sciences, math, business, design etc.”
The fresh.fund project is a real collaboration of Jerusalem’s tech crowd. Along with Siftech and tzvi.vc, the Jerusalem Development Authority, The Ministry of Jerusalem and Heritage, The Jerusalem Municipality, JNEXT, the PRATT foundation, The Leichtag foundation and others are all taking part in this effort, providing support.
It is important to point out that while the board will be led by the students, they will be guided by a team of experienced investors and other mentors who can help them in their selection process. Between tzvi.vc, Siftech, and all the others that are involved, they should have plenty of support in assembling a solid portfolio.
This is reassuring not only to the investors, of whose money is being used for the funding, but to other observers as well. Having seen a number of equity platforms open up for small levels of funding in early stage companies, none of them have felt like they were really genuine or even serious in their approach. This on the other hand feels more like a business as much as it is an exercise in preparing the next generation of investors.
Having spoken with members of Jerusalem’s tech scene, there appears to be a decent level of support behind the project, along with a fair amount of love for the initiative. First and foremost, Jerusalem’s tech scene is still small enough that people know each other and feel invested in each other’s success. If one of them makes it, then they all make it. It is not about beating the Tel Aviv crowd, but gaining the respect that they feel their city deserves.
On perhaps a more practical level, it is worth noting that fresh.fund is not much of a threat to the other VCs that are active in the city. At a only million dollars in their pocket to disburse to the selected companies, they are not likely to be trouncing through anyone else’s territory.
At the same time, this kind of initiative, keeping its ear to the ground through its access to the campus ecosystem, offers a unique opportunity for deal flow that is very appealing and worth the small investment to reach this untapped market opportunity. For Siftech and tzvi.vc, there is some risk involved, but it is minimal.
“We believe that in the Israeli investing ecosystem, student venture is an underserved market,” says Djemal. “We’re excited about the long-term social and strategic benefits of involving student-investors in the decision-making process, which include the dynamism of student entrepreneurs in terms of deal flow, the fresh perspective they bring to the table, and the various community multipliers that come from empowering a population that will build and generate value long into the future.”