Picture this for a Georgia Tech undergrad: taking classes in physics and thermodynamics, eating at the food court, scurrying for computer time at the library. Oh, and getting $20,000 to launch a startup company.
Entrepreneurs have become a hot commodity to boost the economy and create new jobs. That’s pushed U.S. universities to try harder to become fertile grounds for new business ideas. Usually, they focus on igniting entrepreneurship by faculty, grad students or outside business people.
Now, Atlanta technology entrepreneur Chris Klaus is spending $2 million to help Georgia Tech churn out more startups and boost the entrepreneurial chops of undergrads. Half of that money is a donation to fund operations of a new program called CREATE-X, which university officials plan to unveil Wednesday.
Klaus — who left Tech in his sophomore year to start what became a top internet security firm — is putting the remaining $1 million into fund that will invest up to $20,000 in each of 20 undergrad teams admitted into a specific Georgia Tech "accelerator" program this summer.
The investment can help them pay for needs ranging from business travel to web site development. The accelerator program is designed to nourish the fledgling companies with advice, space and other help over the summer.
Klaus has committed enough to fund the program for two years, but he said he hopes to continue it longer and to attract other investors.
“It is integrated into the campus itself, and it is not forcing you to drop out of school to go do a startup,” said Klaus.
Klaus, now 41, started Internet Security Systems, which IBM eventually bought for $1.3 billion.
Creating a path
The effort is part of a broader push at Tech in recent years that includes the launch of a dorm floor just for students interested in startups and a prize competition for student inventors. The university also is trying to create an easier path for undergraduates to tap into the university’s hodgepodge of programs aimed at helping startups.
Tech isn’t alone.
“Universities are hopping on the entrepreneurial bandwagon,” said Jeffrey Sohl, who directs the Center for Venture Research at the University of New Hampshire.
As for the funding Klaus is providing, Sohl said, “If you want to encourage entrepreneurship it is not a bad way to do it.”
Student startups are risky ventures. But the resources it takes to launch a company are significantly less than they were a decade ago in part because of technological advances and the rise of online businesses, and university leaders say more students are coming in ready to build something of their own.
University students “are ripe for this type of entrepreneurship,” said Cam Houser, who leads 3 Day Startup, a Texas-based nonprofit offering short entrepreneurship programs at dozens of universities. “They are young. They are in a creative time of their lives. And they have a risk tolerance. Most of them are not yet paying mortgages. They are not having to be the bread winner of the family.”
Most university accelerator programs don’t have direct sources of investment funding for the students’ companies they may serve, Houser said. But he said several do.
Houser said he hasn’t heard of any that highlight a value in focusing solely on undergraduates. Graduate students, who often have more experience, usually have a better track record with startups, he said. Of course, some undergraduates have managed it, too. Among them: Michael Dell who launched a computer selling empire while at the University of Texas, Mark Zuckerberg who co-founded Facebook as a student at Harvard and Bill Gates who left the same university to launch what would become Microsoft. Each dropped out to follow their entrepreneurial pursuits.
Startup Summer
Georgia Tech’s program is called Startup Summer and is focused on undergraduates ready to immediately launch companies. Students apply for the program. Any team that gets in will have the option to accept an investment from Klaus’ fund, which in return would take about a 7 percent ownership stake in the young company.
Students wouldn’t get college credit for Startup Summer, but it would be treated as internship and listed on their school transcript.
Pieces of CREATE-X have already launched. A pilot version of Startup Summer ran last year, though on a smaller scale and without Klaus’ investment funding for the student companies. Startup Lab, an entrepreneurship class, launched a year ago. And in January the university launched a program for undergraduate-led research aimed at turning student ideas into prototypes.
Raghupathy Sivakumar, an electrical engineering professor and director of CREATE-X, said four years ago he started assessing Tech’s offerings to help startups. He found roughly two dozen programs, but students often had trouble finding out about them and connecting with them.
CREATE-X aims to make those connections easier and instill in students entrepreneurial confidence, he said.
Universities that began as teaching institutions and later became centers of research are on the verge of building a third pillar tied to entrepreneurship, Sivakumar said. “Students come in these days wanting to change the world.”
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