Should we teach undergrads to seek investment?
No.
Almost never.
It is irresponsible and it may be unethical. The failure rates for startups in the first year are well over 50%. Less than 10% of all startups go on to raise any money. Less than 1% of all the U.S. startups ever receive investment from venture capitalists. And more than half of those startups fail.
Seriously, why would you do that to a 20-year-old?
When students receive investment, it makes for good press releases for the school and the program. The local economic development office loves it. The alums love it. Everyone loves it.
The student founders are now flush with cash and poised to scale. Few people (at any age) are ready for the responsibilities or the roller coaster ride.
What’s the alternative?
Bootstrap it. Not everyone can bootstrap – it depends upon the founder having some personal resources: a family, friend or partner who is willing to pay rent and spring for the Red Bull and ramen. But when possible, this is an option for founders that lets them keep their company and own the business they are creating.
Make it a side hustle. This won’t work for everyone either. Some startups can’t be built with only part-time effort. They require sustained effort and velocity. Also, the job taken while working on the startup might not pay enough to cover rent and student loans.
Any other ideas?
Customer-funded startups are awesome! Start selling now. For the startup that can manage it, this is a great option. Many founders can do something that starts the revenue flow – at least enough to buy Soylent for the team.