The Riata Center for Entrepreneurship in the Spears School of Business awarded a total of $75,000 to three teams of Oklahoma State University student entrepreneurs this summer in the first round of a new investment fund designed to invest in budding student-led businesses. Called the Riata Pre-Seed Fund, the innovative financial tool invests in student startups that have been shown to have potential as for-profit ventures.
Launched early this year with more than $330,000 in donations through the OSU Foundation, the Riata Pre-Seed Fund gives any OSU student with an idea for a business the opportunity to apply for early proof-of-concept funding at a stage when investors rarely finance unproven concepts.
“This is the most difficult capital for a startup to raise because it has the highest risk profile,” said David Thomison, a professor of practice and George Kaiser Family Foundation Endowed Chair in Entrepreneurship. “Getting this initial proof-of-concept funding is by far the most challenging.”
The Riata Center invited the first funding applications this spring with student teams making presentations to the Riata Pre-Seed Fund Committee this summer. Three teams were awarded $25,000 each, the maximum that can be given to a startup.
The winning business ideas with student founders and faculty advisors:
Bubble Calm makes an over-the-counter bubble gum containing ingredients to foster calmness – student team members: William Petty, accounting, and Walter Bowser, economics; faculty advisor: Kyle Eastham, School of Entrepreneurship.
One-Voice has developed algorithms to integrate and analyze multiple sources of sewer pipe inspection data – student team member: Hossein Khaleghian, civil engineering; faculty advisors: Richard Gajan, School of Entrepreneurship, Dr. Yongwei Shan, Department of Civil Engineering.
Paldara Pharmaceuticals is developing an antimicrobial gel coating containing bacteriophages that if approved for human use could treat urinary tract infections – student team members: William Colton, microbiology and biochemistry, and Beau Blanchard, entrepreneurship and business administration; faculty advisors: David Thomison, School of Entrepreneurship, Dr. Matthew Cabeen, Department of Microbiology and Molecular Genetics.
Thomison said the Riata Pre-Seed Fund is meant to offer student entrepreneurs investment capital at a time when it’s most scarce while providing them with an educational experience that mimics the real-world environment most startups face when trying to attract early investment.
“We’re replicating the private sector within a confined learning opportunity for OSU students,” Thomison said. “This is an opportunity for our students to apply the skills that they’re learning in all of their classes, not just entrepreneurship. You need marketing and accounting. To be successful as an entrepreneur you have to do it all.”
In the proof-of-concept stage, entrepreneurs often must rely on their own money or investment from family, friends and business associates to fund a startup at this early stage. But college students typically have little or no money to invest nor time to raise it from soliciting others. Investing in research at this early stage is critical to understanding the marketplace and customer needs and to ensure a startup’s product or service actually provides a well-defined solution to an existing market problem.
“You want to make sure that you’re able to show that a customer’s need can be satisfied at a significant productivity gain over competitive alternatives,” Thomison said.
Much of the fund’s assets have been donated by entrepreneurs, who Thomison said often want to pay it forward for their success by helping the next generation of business innovators. Thomison said the fund’s goal is to realize enough returns from successful startups to sustain it in perpetuity.
Any currently enrolled OSU undergraduate or graduate student, or team of students, with a business idea can apply to The Riata Pre-Seed Fund, which accepts applications three times a year during the spring, summer and fall semesters. All applicants must have a business plan for a for-profit venture to apply, which also must meet other growth criteria. To learn more about the fund, visit https://business.okstate.edu/riata/pre-seed-fund.html