Join us online at COVERGENCE OCT 22-23
The University Tech/Startup Gap Fund and Accelerator Summit
- 20 in-depth gap fund/accelerator program reviews
- Breakout and group discussions on common challenges
- Corporate and Investor partnering panels
- Networking web-site and associated materials
Original Source: Forbes: College Towns Are The Next Big Thing For Startups
With nearly 50% of millennials looking to start their own business in the next three years, it is not a surprise that the new generation of entrepreneurs aren’t based – or even particularly interested – in Silicon Valley. With students and recent graduates all over the country experiencing startup fever, college towns may just be the next big thing for entrepreneurship.
Even though nearly 47% of venture capital deal value in the U.S. goes to the West Coast, other startup hubs are rising. Cities such as Columbus, OH, St. Louis, MO, and Denver, CO, offer burgeoning and diverse economies with a dense concentration of college students – Ohio State, Washington University and University of Denver, respectively. Along with lower costs of living, the talent and technology emerging from college towns have become a magnet for startups and VC dollars.
The overall cost of living in San Francisco is 60% higher than the national average, according to PayScale, with housing a whopping 165% above the average. Michigan, for example, where the cost of living is 9% lower than the national average, has received $1.4 billion in startup investment in the past five years, according to a Pitchbook Report on VC ecosystems. As the cost of living and job competition increases in Silicon Valley, many companies and venture capitalist firms are investing in college towns.
“There’s so much momentum and excitement around entrepreneurship, startups and small businesses as the back-bone of job creation in the U.S.,” says Mary Grove, a partner at Revolution’s Rise of the Rest Seed Fund – launched in 2017 by billionaire co-founder of AOL Steve Case, with an $150 million early stage fund focused exclusively on startups in overlooked cites such as Memphis and Cincinnati. “We are really excited about what we see from a talent perspective in these cities and I would say that universities certainly play a very fundamental role in that.”
But being strategically located is not enough. Universities must provide programs and resources that promote and foster an entrepreneurial ecosystem.
Student entrepreneurship has increasingly become a value proposition of college in an age where people are questioning the value of higher education. Universities that have strong entrepreneurial ecosystems gain the benefit of being highly desired by college applicants.
“Students have recognized a need for the entrepreneurial mindset to provide resiliency in their careers,” says Jonathan Fay, Dixon and Carol Doll executive director for the Center for Entrepreneurship at the University of Michigan. He says this is why there has been a 65% increase in undergraduate enrollment at the center in the past five years.
With college towns such as Atlanta, GA, and Boulder, CO emerging as leading innovation hubs, CompTIA’s 2018 Tech Town Index suggests that students don’t have to move out of state to land a job in the STEM industry or start their own businesses.
During his sophomore year, University of Michigan graduate – Benjamin Rathi– founded Blueprints For Pangaea, a nonprofit organization that reallocates unused medical supplies from the United States and delivers them to impoverished hospitals around the world.
“I set out to redefine the possibility of student impact,” says Rathi. “I wanted to see what was possible– could a group of five 20-year-old students send half a million dollars in medical supplies overseas?”
Rathi and his team participated in programs and competitions at the University of Michigan that promoted and financed entrepreneurial projects. Through resources such as the university’s Optimize Social Innovation Challenge and the Michigan Business Challenge, Rathi funded over $20,000 to help him launch and advance his business. Five years later, Blueprints for Pangaea has transferred more than $1 million of excess medical supplies and opened eight national chapters in universities across the nation.
“I have met so many student entrepreneurs, people who have graduated, or members of the community who didn’t have the opportunity to study at the university, who are trying to do amazing things but they don’t have programs which will allow them to compete and win money,” says Rathi.
During the past three decades, the development of a structured curriculum around business development has been exponential. A study by the Kauffman Foundation for Entrepreneurship reports that in 1985 there were 250 entrepreneurship courses across all colleges in the U.S. Now, there are more than 5,000 programs offered in two-year and four-year universities.
Paul Judge, a technology entrepreneur and investor who co-founded TechSquare Labs, a leading seed-stage venture fund, says that at the core of Tech Square’s mission is to work with universities to support and fund promising ideas from students and professors.
Tech Square Lab’s offices are located next to Georgia Tech’s campus, facilitating the collaboration of students, professors, researchers, and investors. The incubator has also funded over 20 companies by Georgia Tech alumni and four companies by Georgia Tech professors.
“The reason that a tie to a university is so critical is because of the amount of creativity and talent that is walking the halls on university campuses,” he says. “I believe students no longer go to college to get a job, instead they go to college to create their own job.”