dormroomDeals like these are exactly why First Round Capital started the Dorm Room Fund. In the Fall, the Philadelphia-based venture firm announced it would give a team of students $500,000 to invest in Philly-based companies built by other students.

The idea was that student-investors would unearth the best deals on campus, and the fund could provide student-entrepreneurs enough wiggle room to grow their companies without dropping out of school.

With its first investment, the Dorm Room Fund has already proven that philosophy out. It’s $20,000 for customer service software company Firefly isn’t exactly a brilliant uncovering of under-the-radar startups — the company Firefly’s cool screen-sharing software has been fawned over by no shortage of tech blogs and local media outlets.

No, the real value is that, before the Dorm Room Fund, Firefly was closed to outside investment. The company, built by Penn undergrad students, was focused on making money from day one. For that reason, they didn’t need any venture capitalists, despite their attempts, co-founder Dan Shipper tells me. “In the past we’ve rejected investment offers,” he says. “Dorm Room Fund was important because it represented the model we believe in.”

By “model we believe in,” he means the “stay in school” model. Not everyone agrees with Peter Thiel that entrepreneurs don’t benefit from college, including Shipper (not to mention PandoDaily Editor and NYU professor Adam Penenberg).

Shipper has been vocal about going against prevailing wisdom of dropping out, moving to the Valley, and raising a bunch of venture money. He’s gotten attention for advocating staying in school and bootstrapping; in the process he’s turned down Y Combinator and a strangely public job offer from 42Floors that went viral. The fact that Dorm Room Fund supported his staying in school was refreshing, Shipper says. The $20,000 gives him the ability to “figure things out faster” on his project and experiment a little more with customer acquisition.

There’s no guarantee that, if Firefly decides to step up to the big leagues of venture capital, it’ll take money from First Round, thus making the Dorm Room Fund a feeder for First Round deals. But the odds are in First Round’s favor: Firefly is already moving into the firm’s new Philly offices, right down the street from Wharton.

Which is where First Round sourced several members of its 11-person investment team of students. They’re from Drexel and Penn, led by Wharton MBA students Derek Kleinow and Jennifer Sung. Both became interested in the fund for the educational experience, both from dealmaking and the new perspectives of the investment team. The rest of the crew, eight of which have voting rights, includes a mix of undergrads studying computer science, finance, management, and business. They’re purposely diverse, with interests and club involvement ranging from e-commerce to hardcore tech geekery to management.

Kleinow says he’s built a few companies before but never raised outside funding. He doesn’t aspire to become a VC; he wants to learn what it’s like on the other side of the table before embarking on his own fundraising as a founder some day.

“We’re excited by the greater vision,” Sung says. “Two years later, the hope is we will have funded 20-25 companies in Philly.” The group is figuring out its procedures now and will hit the ground running, making more deals starting in January.