Part fund, part accelerator, Contrary Capital invests in student entrepreneurs
First Round Capital has both the Dorm Room Fund and the Graduate Fund. General Catalyst has Rough Draft Ventures. And Prototype Capital and a few other micro-funds focus on investing in student founders, but overall, there’s a shortage of capital set aside for entrepreneurs still making their way through school.
Contrary Capital, a soon-to-be San Francisco-based operation led by Eric Tarczynski, is raising $35 million to invest between $50,000 and $200,000 in students and recent college dropouts. The firm, which operates a summer accelerator program for its portfolio companies, closed on $2.2 million for its debut, proof-of-concept fund in 2018.
“We really care about the founders building a great company who don’t have the proverbial rich uncle,” Tarczynski, a former founder and startup employee, told TechCrunch. “We thought, ‘What if there was a fund that could democratize access to both world-class capital and mentorship, and really increase the probability of success for bright university-based founders wherever they are?’ “
Contrary launched in 2016 with backing from Tesla co-founder Martin Eberhard, Reddit co-founder Steve Huffman, SoFi co-founder Dan Macklin, Twitch co-founder Emmett Shear, founding Facebook engineer Jeff Rothschild and MuleSoft founder Ross Mason. The firm has more than 100 “venture partners,” or entrepreneurial students at dozens of college campuses that help fill Contrary’s pipeline of deals.
Last year, Contrary kicked off its summer accelerator, tapping 10 university-started companies to complete a Y Combinator -style program that culminates with a small, GP-only demo day. Admittedly, the roughly $100,000 investment Contrary deploys to its companies wouldn’t get your average Silicon Valley startup very far, but for students based in college towns across the U.S., it’s a game-changing deal.
“It gives you a tremendous amount of time to figure things out,” Tarczynski said, noting his own experience building a company while still in school. “We are trying to push them. This is the first time in many cases that these people are working on their companies full-time. This is the first time they are going all in.”
Contrary invests a good amount of its capital in Berkeley, Stanford, Harvard and MIT students, but has made a concerted effort to provide capital to students at underrepresented universities, too. To date, the team has completed three investments in teams out of Stanford, two out of MIT, two out of University of California San Diego and one each at Berekely, BYU, University of Texas-Austin, University of Pennsylvania, Columbia University and University of California Santa Cruz.
“We wanted to have more come from the 40 to 50 schools across the U.S. that have comparable if not better tech curriculums but are underserviced,” Tarczynski explained. “The only difference between Stanford and these others universities is just the volume. The caliber is just as high.”
Contrary’s portfolio includes Memora Health, the provider of productivity software for clinics; Arc, which is building metal 3D-printing technologies to deliver rocket engines; and Deal Engine, a platform for facilitating corporate travel.
“We are one giant talent scout with all these different nodes across the country,” Tarczynski added. “I’ve spent every waking moment of my life the last eight years living and breathing university entrepreneurship … it’s pretty clear to me who is an exceptional university-based founder and who is just caught up in the hype.”