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NIIC takes a stake in student businesses
12/31/2010
Many useful skills that are fun to develop have a learning curve that can be daunting without a little coaching from a guru in the field. Fort Wayne-based
GooRoo
builds online communities to help with that.
The business was started in February by a student team at the Northeast Indiana Innovation Center. Four months ago, the team of Ryan Imel, Aaron Kugler, Eric Lash and Justin Vela launched
WPCandy.com
to build a community around the popular WordPress open-source blogging software.
WPCandy attracted 50,000 unique visitors in November, and Vela said it was on track for a repeat of that traffic level or better in December. The team accomplished this with help from the Student Venture Lab, a program NIIC is revamping in an effort to produce similar results in greater volume.
By establishing investment performance expectations for funded teams and preparing them to pitch business plans to angel investors, an improved Student Venture Lab can contribute to “a new wave of entrepreneurship,” said Steve Franks, program manager.
“We’re hoping to see our city become much more known for its software applications, Web applications, mobile applications and game applications — things that require more sweat equity than those things where you have to manufacture and maintain an inventory,” he said.
“We have smart people here, and there’s no reason we can’t be as successful as anywhere else,” he said. “We have angel investors here and more and more (investors) over time who are comfortable with technology ventures.”
Franks has been working with student ventures at the Innovation Center since 2008, and during that time he’s seen nine companies formed through the Student Venture Lab. The program is fed by teams showing the most promise in an entry-level student entrepreneurship program the center calls BizWiz. So far, about 200 students have participated in BizWiz.
BizWiz holds get-togethers every month, at which participants mingle with other entrepreneurs to share ideas and discuss business startup tips presented by guest speakers who have personal experience with entrepreneurship.
Participants also meet individually on a regular basis with a business coach at the center, and BizWiz provides them with access to its network of business service providers.
Technology-related BizWiz student projects considered the most likely to succeed have been able to “graduate” to the Student Venture Lab, a program that has provided grants to cover some startup and operational costs, space to work on development of the business at the center and a paid internship.
Attorneys, including Pat Hess with Beckman Lawson LLP and John Barce with Barrett & McNagny LLP, in Fort Wayne have donated their time and expertise to assist with incorporating the student-run businesses.
The GooRoo team has used Student Venture Lab office space, technology and funding to develop a WordPress mobile application and launch websites for GooRoo and for online communities centered around WordPress, fitness (
FirstRoundFitness.com
), home repair (
HomeRepairForYou.com
) and cooking (
TheChefsMenu.com
).
Without the program, it would have taken longer to pull together the resources required, but “the biggest benefit for us has been our meetings with Steve,” Vela said.
“He makes us think about our decisions and explore every direction we’re going to be taking to make sure every move is really thought out,” he said.
“Another benefit is just working with other entrepreneurs in the area,” Vela added. “It’s helped enhance the entrepreneurial spirit. They’re always thinking about new things they can do.”
To improve the program, the Innovation Center has borrowed a few pages from the playbooks of renowned tech startup incubators such as Y-Combinator in Mountain View, Calif., and TechStars, which focus on leveraging the money-making potential of products and services entrepreneurs develop. TechStar operates a rotating schedule of mentorship programs each year in Boston, Boulder, Colo., Seattle and New York.
In addition to six months of office space, which would have cost about $3,000, teams selected for the revised Student Venture Lab program will receive seed investments of $2,500 rather than grants of that amount and founder stipends rather than internships.
In exchange for this and individual coaching from the same people who have worked with founders of successful Fort Wayne businesses such as Trustbearer Labs and Schwartz Biomedical, NIIC will receive a 3-percent equity stake in the Student Venture Lab projects.
The one-on-one coaching will prepare participating entrepreneurs to present customer-validated business plans during a “Demo Day” to bankers, angel investors and regional tech and business community leaders.
Tangible progress may be rewarded with six additional months at the center along with follow-on cash and a continuation of the founder stipend in exchange for a smaller amount of additional equity, Franks said.
“The idea behind having a program that’s not just, ‘Here’s a grant and an internship. Have fun and whatever happens, happens,’ is there’s an expectation that something greater happens because it’s an investment,” he said.
Applicants to the program will have to answer more questions, and the application process will be more stringent than it has been in the past because it will carry the expectation of producing a return on investment, Franks said.
A number of the startups will not succeed, but “there’s a chance some percentage of these companies will have a decent return at some point. The point could be years away, but when that happens, it provides us with the opportunity to roll that back into other student investments,” he said.
Student Venture Lab programs are funded by three organizations: the Lincoln Financial Foundation, Grabill Bank and the Edward M. & Mary McCrea Wilson Foundation, Franks said.
In addition to increasing the number of successful startups the program produces, Franks said improvements to it will “help us be better financial stewards of the funds we have to work with.”
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