GRAND RAPIDS — A new crowdfunding platform aims to connect student entrepreneurs at colleges and universities with people willing to invest money and time in their ideas.
Entrepreneurs Tom Coke and Matt Larson formed Grand Rapids-based CampusStarter LLC as a rewards-based crowdfunding platform where students can post their ideas. Prospective investors can browse the website campusstarter.co for potential investment opportunities.
The idea stemmed from studies showing 18 to 24 year olds of today’s millennial generation are much more attune to entrepreneurism, Coke said.
“They have ideas they want to pursue, so it is a cultural shift. Entrepreneurship is becoming way more popular,” said Coke, an advocate of crowdfunding as a source for startup businesses to raise seed capital and a former state securities regulator.
“Basically, what we’re trying to do is give the students an opportunity to raise a little bit of real money, market their product and tap into the alumni base,” he said. “They have a project, it’s a relatively simple product, they’re super driven to do it and there are not a lot of avenues for them to turn to from a funding standpoint.”
Coke and Larson launch CampusStarter as colleges and universities do far more today to teach entrepreneurism, whether through offering individual degrees or courses, or embedding it across their curricula.
Research by the Kansas City-based Kauffman Foundation indicates that 40 years ago, just 100 colleges in America offered a major in entrepreneurship. The number grew to 250 by 1985, and ballooned to more than 5,000 institutions by 2008 when more than 400,000 college students enrolled in the programs, said Amisha Miller, a senior program officer with the Kauffman Foundation.
The foundation is presently working to update the data, and “we already know the numbers are going to be much larger,” Miller said. “Young people are very interested in entrepreneurship.”
But that interest hasn’t directly translated into sustained growth in the number of millennials across the country who are starting businesses. Despite the higher interest in entrepreneurship, the annual rate of business startups by 20 to 34 year olds actually has been declining across the country, Miller said.
One potential reason for the decline has been traced to the large amount of debt students wrack up in completing college, which dampens their ability to form a startup company while in school or in the immediate years afterward, Miller said.
Still, “there is absolutely a market” for connecting students to investors to help them build a business around their ideas, she said.
CampusStarter.co launched last week with four contracts with student entrepreneurship clubs at Michigan State University and Indiana University, plus two others that are in a pilot phase. The company is backed by $50,000 of the partners’ own money, plus capital from friends and family, $20,000 received from the business accelerator Emerge Xcelerate in Grand Rapids, and outside investors in Grand Rapids, Chicago and New York.
The platform lists campaigns for free and generates revenue by charging a 4-percent fee on successful capital raises. CampusStarter hopes to establish a “substantial relationship” with 250 colleges and universities by the end of first year, Coke said.
In forming CampusStarter, Coke and Larson want to help connect student entrepreneurs to prospective investors and alumni who can not only support their businesses with seed capital but also act as mentors. They hope that the common bond between students and alumni will result in lasting connections.
“They contribute to your campaign and say, ‘Hey, I was in your shoes one day, let’s connect.’ And now you can have a lifelong connection and maybe a mentor down the road,” Coke said.
The partners may expand the platform to list projects by other groups or professors seeking funding for a project or research. It could also be used as a tool for university development offices to reach out to prospective donors who may give online, but who don’t respond to direct mail or telephone solicitations, Coke said.
The former idea is similar to a crowdfunding site known as Superiorideas.org that Michigan Technological University launched in 2012 for professors and students to seek funding for research or service projects.
Kevin McCurren, executive director of the Richard M. and Helen DeVos Center for Entrepreneurship & Innovation at Grand Valley State University’s Seidman College of Business, likes the broader concept for CampusStarter.
McCurren sees potential for offering not just a way for student businesses to raise seed capital but also for universities to connect with younger alumni who are willing to support a project at their alma mater and are more apt to use crowdfunding platforms.
Crowdfunding could become a new development model for universities, he said.
“I see it as a way for universities to really touch their alumni and their constituents in all kinds of different places and for different causes, including startup businesses for students,” McCurren said. “The linkages to a campus allow them to build around the natural affinity we feel toward the universities that we graduated from.
“Those four years are very special to us.”