SSE Labs, a subset of Stanford Student Enterprises (SSE), is currently the only Stanford-run startup lab available to Stanford students to develop their ideas over the summer. SSE Labs is a non-traditional venture capital firm, an “incubator accelerator,” that provides a greater financial contribution to its teams than other venture capital firms. SSE Labs covers housing, food, office space, legal fees and other expenses that enable the students to better concentrate on their projects.
SSE Labs is an educational initiative that does not have the goal of making a profit, a distinct departure from its predecessor, SSE Ventures. SSE Labs, like SSE, is run entirely by Stanford students.
SSE Labs chooses 5 to 8 teams of students to participate in a 12-week long program during which the teams design their own start-ups. While a team can be made of an individual student, they are typically made up of 2 to 4 students. There are no specific prerequisites; anyone, from freshmen to Ph.D. students, is eligible to apply. 61 students applied for the program this year.
SSE Labs departs from the original SSE Ventures in several ways. Matt McLaughlin, former CEO of SSE, stated, “SSE Labs was created based on what SSE Ventures did wrong.” SSE Ventures was a standard seed fund that gave participants a lump-sum to start their own business and requested equity in return. However, for students to be willing to give up a piece of their company, they often requested more funding than the ASSU was capable of providing. Current CEO of SSE, Raj Bhandari, has said that SSE Labs will be “offering a lot more educational and networking opportunities than in the past.”
SSE Labs is more appealing to potential entrepreneurs because, unlike many competing venture capitalist firms, it does not request any equity, allowing teams to keep their profits.
SSE Labs offers a number of educational benefits to the team members chosen for the summer. The lab is centered on mentorship, with students interacting with about 15 mentors as varied as Stanford professors, experts in the field, or other venture capitalists. Mentors include Jay Borenstein, a computer science professor at Stanford, Matt Cohler, the General Partner at Benchmark Capital, and Ariel Poler, an Angel Investor. The teams are encouraged to meet with the mentors as often as possible, and the mentors hold biweekly office hours to help the teams formulate ideas.
In addition to meeting with mentors, the teams also interact with each other to discuss ideas.
The funding for SSE Labs comes from two sources. $15,000 comes from the board of SSE, and $15,000 comes from Charles River Ventures, a local venture capitalist firm that has often been willing to support SSE in a variety of ways. McLaughlin expressed confidence that, in the future, all the teams wanting their ideas to be funded by venture capitalists will be able to do so, but he supports teams that choose not to sell their companies.
Teams hope that venture capitalist firms around the area will pick up the ideas they generate. Mid-way through the summer, the teams have an opportunity to present their work to firms around the area and hear feedback. At the end of the summer, there is a Demo Day, during which teams can pitch their ideas to local venture capitalists. If the venture capitalists pick up the ideas, they can then receive the second stage of funding. Anton Zietsman has expressed his surprise that there were no prior opportunities like this available for Stanford students, particularly on a campus full of students with a high capacity for entrepreneurship.
The rigorous SSE Labs application process involves filling out an application online that requests information about the project idea, target audience, risks of the project, and the goals. After this online submission, applicants are interviewed and asked to briefly present their ideas. The criteria, says Anton Zietsman, co-founder of SSE Labs, includes the idea’s creativity and the student’s past successes in entrepreneurship. Zietsman adds that the capacity to see a project from idea to creation is crucial.
The most common ideas are consumer web companies and recruitment websites. Common experiences from the applicants include web programming and iPhone application programming. Most applicants come from a computer science or electrical engineering background. The program has an advisory board made up of top investors from companies in the area and experts from the various industries to choose who will participate in SSE Labs. The chosen applicants are announced on a rolling basis.
This year’s applicants will hear shortly on whether or not they are chosen, though the date at which the list of teams will be announced publicly has not yet been set. This program’s main goal is to help young entrepreneurs develop their ideas without worries about funding or resources, not to make sure each team can sell their company. If the program is successful, the founders hope that the funding can be scaled up in the future to accommodate more teams.