In Focus: ‘Incubator’ Helps Students Learn the Business of Business
Fellow Yale rowers Bob Casey and Rich Littlehale enjoy scheming about potential business ventures, but when they became serious about forming a company to sell vitamin water — with some of the proceeds supporting health research — they realized that there was a lot they first needed to learn.
Since the fall of last year, when they entertained their original idea, the two juniors have shifted gears dramatically. They are now the co-founders of TwigTek, an electronics recycling and refurbishing company that is linked with charitable causes.
Casey and Littlehale credit the Yale Entrepreneurial Institute (YEI) with providing them with a lot of the practical know-how to make their business idea into a reality, and for helping them to not lose heart when their original plan had to fall by the wayside. (See related story)
“YEI has supported and encouraged us every step of the way,” says Littlehale.
TwigTek is one of several student-run businesses celebrating the YEI’s transition this term from a 10-week summer program to a full-time office where budding entrepreneurs can gather daily to get and share advice, work on their business plans, or, in some cases, actually operate their businesses.
YEI director Jim Boyle ‘94 Ph.D. says that undergraduate and graduate student entrepreneurs will be served better by the office’s yearlong presence.
“During their 10 weeks in the YEI Summer Fellowship Program, students who already have a business concept are exposed to entrepreneurs, venture capitalists, angel investors [individuals who invest in start-up companies at the earliest stages of their existence] and faculty members who share their knowledge, expertise and advice on such topics as patents, accounting, market strategies and protecting intellectual property, among others. These experts also offer feedback to the students about the execution of their business plans,” says Boyle.
“While the program is intensive, it takes a lot longer than 10 weeks for students to create a business. We are now able to support them through that entire start-up process,” he adds.
YEI was formed almost two years ago through the joint efforts of a core group of alumni, students and administrators with the goal of helping Yale undergraduate and graduate students start new business ventures. It has since supported the launch of over 30 student-founded companies; seven of these have received commitments for over $3.9 million of outside investment capital. The office is under the auspices of the University’s Office of Cooperative Research.
“We act as a portal for entrepreneurship on campus and offer programs and events that serve the entrepreneurial interest of Yale students and the New Haven community,” says Shana Schneider ‘00, deputy director of YEI. “Our goal is to strengthen the entrepreneurial community here on campus and within the region.”
With its new full-time status, YEI has expanded its offerings to help students execute their business plans.
“The most important new tools will be enhanced access to mentors and early-stage capital,” Boyle says. “To help support student entrepreneurs’ need for beginning funding, YEI has made new connections with a growing number of venture capital and angel investors from throughout the Northeast.”
The new mentor program, which is modeled on a successful one at the Massachusetts Institute of Technology (MIT), will match student entrepreneurs with professionals in their fields who can provide the young innovators with “unbiased feedback,” Schneider says. The mentors are selected both for their expertise and for their skills as advisers; they include entrepreneurs, chief executive officers (CEOs) and corporate directors. Many are Yale alumni.
Another new resource for students is YEI’s “incubator” office space for student ventures. To use the space, located in the YEI office, students must prove they have raised funding to pay “rent” and that their company has a definable edge. Those who have not yet reached that point in their business formation still have access to a common area in YEI during business hours.
Currently, three student ventures are housed in the incubator: TwigTek; PaperG, an online local advertising firm; and GoCrossCampus, a team-based, online gaming platform. All of these start-ups were founded by participants in YEI’s Summer Fellowship Program.
“The incubator space is very, very special because it is a great place for growing and developing a company,” says Littlehale. “Since TwigTek is the youngest venture in the incubator, we’ve been able to learn so much from the students who started PaperG and GoCrossCampus. Bob and I bounce ideas off them all of the time. We are essentially one big team even though we’re working on different ventures. And because of our close contact and communication, TwigTek is able to avoid some of the mistakes that PaperG and GoCrossCampus originally made.”
In addition to these new offerings, YEI will continue to sponsor its Summer Fellowship Program, which was created two years ago to help students actually begin the startup of their ventures, says Schneider.
Last year 22 student teams applied to participate in the 2008 summer program, and eight of them were chosen, including the team of Littlehale and Casey.
Students in the Summer Fellowship Program, which Boyle calls an “extended boot camp,” spend about half of their time learning from guest speakers about the various issues and steps involved in starting and running a new venture and the other half of the time working on their own.
Nearly 100 guest speakers have shared their expertise; they have included Yale trustee Len Baker ‘64 of Sutter Hill Ventures (a capital investment firm); Yale professor Barry Nalebuff, who co-founded Honest Tea; Max Mancini, senior director of disruptive technologies at eBay; Josh Kopelman of First Round Capital; and Yale alumni Keith Ferrazzi, CEO of Ferrazzi Greenlight (a marketing and sales consulting company) and Miles Lasater and Sean Glass, co-founders of the undergraduate Yale Entrepreneurial Society (YES) who also co-founded the successful New Haven financial services company Higher One while still undergraduates. Many of these guests also meet one-on-one with student entrepreneurs to provide feedback on their business plans.
Today, through the expanded YEI initiatives, students also have the opportunity to meet with campus visitors from the entrepreneurial and business communities throughout the year, note Boyle and Schneider, who currently are working with over 35 new student ventures. A handful of new students come to YEI each week to discuss their business ideas or concepts, they say.
The institute has also become the umbrella for student entrepreneurship at Yale - working with YES and groups at the Schools of Management, Engineering, Law, Forestry & Environmental Studies and Medicine - and maintains an online calendar listing the various entrepreneurial-related events on campus.
“By working with a number of organizations on campus and within the region - including the New Haven Economic Development Corporation, CT Innovations and others - we’re also able to show student entrepreneurs that starting a company in New Haven is a lot more attractive than they realize,” says Schneider.
Boyle and Schneider expect that someday, like MIT or Stanford, Yale will be known for its success in fostering student-founded ventures. They believe the office’s full-time status will help many more students realize their dreams of both profit and non-profit start-ups.
“With so much expertise right on campus, the many alumni in the region who can provide support and assistance, and the growing inflow of early-stage capital from both venture and angel sources, this city really is a wonderful place for student entrepreneurs,” says Boyle.
Littlehale says that YEI has provided him the ability to pursue what he considers the best of two worlds: a liberal arts education and real-life business experience.
“The lessons I’ve learned have been invaluable,” the Yale student says. “I’ve learned how to structure a contract, talk to lawyers, pitch to investors and go over financials. There’s no better time to try out new ventures than when you are a student. As long as you are ethical — and Bob and I are — there’s really no risk. If your venture fails, the worse that happens is that you just go back to just being a student. No, not just being a student - being a student at Yale!”
For more information on YEI, visit www.yale.edu/yei.
— By Susan L. Gonzalez