As a student, I agree that recruiting is a huge problem. Most CMU students have jobs by October their Senior year, and startups can not afford to make offers that early, or even pay for a booth at the job fairs.
It doesn't seem like this fund forces people to stay in Pittsburgh. I do think it is important that the school continue to encourage people to stay though; SF and Boston shouldn't have a monopoly on entrepreneurship.
Any advice or thoughts about what we (Pittsburgh startups) can do to get students excited about our respective companies and convince them to take a role with us over another job?
Just come and talk to us. The first step is just letting us know you exist, and then why we should be excited about you.
It will be a lot easier for you to convince Sophomores and Juniors to come on as interns than getting a graduating Senior at first. On the student's part it is much less of a risk, and besides, staying around for a summer in Pittsburgh isn't too bad. Once you get some people to intern for you then you can get some name recognition on campus and start recruiting more seriously.
I'd say skip the job fairs: In four years, I never considered attending one because they are mostly perceived as boring among your likely target demographic.
Some companies come and give talks about their infrastructure or technology -- these were always what got me excited and interested. I also really enjoyed a few of the competitions and challenges (like Facebook's and Yahoo's).
Just being on campus and doing events which give students a taste of the excitement of creating something would probably generate much more interest than you're seeing now.
I already knew I wanted to work at a startup a year ago, so I had to actively ignore the constant recruiting from the big names while putting effort into chasing down leads with startups. Had I not already known what I wanted (from past internships), it would have been much easier to just sit back and take the pitches which came my way.
Bottom line: come woo us with talks about the cool stuff you do. Send your engineers along too to talk shop with us. Run hack sessions and showcase the winning apps. Show us how much more fun we'd have doing things your way, as opposed to Microsoft's, and you'll have the students you want lining up to apply.
It doesn't seem like this fund forces people to stay in Pittsburgh. I do think it is important that the school continue to encourage people to stay though; SF and Boston shouldn't have a monopoly on entrepreneurship.