Starting a business in college can be tough, but check out these financing opportunities for students.
- While many people seem to think it's impossible, plenty of resources make it possible for students to launch startup companies.
- Some possible methods of funding a startup as a student are venture funds, networking events and more.
- Some other methods of funding a startup are bootstrapping, crowdfunding and small business loans.
With minimal risk and numerous resources, student entrepreneurship is on the rise at campuses all over the country. According to an Insights Report from the Kauffman Center for Entrepreneurial Leadership, more than 1,500 universities offer some form of entrepreneurial resources, an increase of 120% in the last five years.
While most universities now offer incubators, hackathons and networking events, there are a multitude of resources that aren't limited to a specific student body. If you didn't win your campuswide business competition, never fear. You still have options to give your business idea the leverage it needs.
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Almost 80% of professionals consider networking valuable to career success, according to LinkedIn's corporate communications team. The same study found that 70% of people were hired at a company where they had a connection with a current employee.
Networking is essential for success in any career field, but especially so in the entrepreneurial and business worlds. Not only are there events designed to connect students with bright ideas to others with similar passions but also to investors and community leaders.
The Collegiate Entrepreneurs' Organization (CEO) has more than 400 chapters on university campuses throughout North America, which support more than 16,500 emerging collegiate entrepreneurs annually. CEO also hosts regional events and an annual global conference to connect members to industry leaders, successful entrepreneurs and other students. The annual conference targets students but is open to any individual.
In addition to the resources listed in this article, research networking events for startups and entrepreneurs in your community. Although these won't necessarily be geared toward student-related obstacles, you can still meet and receive advice from experienced innovators.
Business plan competitions
Business plan competitions not only provide a mechanism to finance a startup but they can lead to publicity and valuable introductions.
Business model competitions have become so popular that sites like iStart have emerged to connect students with the most appropriate contest for their circumstances. As a bonus, iStart members can place their business plans in a searchable database for anyone to view to promote connections with venture capitalists.
Some competitions, like the Global Student Entrepreneur Awards, require success at a local level before qualifying to enter. Others, like the International Business Model Competition, offer the option to compete on a global level.
The advanced state of student entrepreneurship has inspired student-focused investment funds to emerge across the world.
Contrary Capital believes the next generation's most successful companies will emerge from universities. Its LinkedIn page says, "No organization truly capitalizes on the immense talent and opportunity that abounds on university campuses across the globe. We're fixing that."
Another resource, Dorm Room Fund, is a national, student-run venture capital fund backed by First Round. The organization has invested in 200 startups that have raised more than $400 million in the last five years.
"No matter where you are in the country, or what school you go to, you can now grow your startup with access to a strong network of investors, world-class mentors, and a $20,000 check," the company wrote in a blog post. [Interested in alternative small business loans? Check out our best picks.]
According to Startup Grind, one very popular method of securing funding for startups is creating a campaign on a crowdfunding site. This means that your business will be funded by those who believe in your product or company idea and wish to help fund it. Typically, these websites allow users to offer small gifts in exchange for donations. For instance, you may offer a keychain for a $10 donation and a T-shirt for a donation of $50 or more. Either way, the great thing about these donations is that they do not need to be repaid.
Small business loans
Another great way to fund a business while you are still in school is with a small business loan. While these can be difficult to obtain, with the help of a good credit score, collateral and a sound business plan, you may be able to get a business loan. However, beware of the banks or organizations you do business with; some can be predatory and end up costing you far more than the upfront capital is worth.
Although it is not always advised, bootstrapping can be an excellent method of securing money for your startup. This involves using present lines of credit, borrowing money from friends and family, clearing out your savings, and any other method you can use to get the funds needed to launch your startup. Bootstrapping works best for companies that do not need a large amount of capital to launch and also companies that are expected to turn a large profit in a short period of time.
According to the Kauffman Index of Startup Activity, 550,000 Americans launch new businesses each month. For undergraduate students ready to explore their ideas, numerous opportunities are available in places other than their home campuses.
But that's not to say those opportunities should be ignored. The share of incubator programs associated with universities has grown to a record high of 42%, according to the International Business Innovation Association's 2016 IMPACT Index, up from one-third in 2012 and one-fifth in 2006.
History has demonstrated that student entrepreneurs can create highly disruptive and profitable companies. For budding entrepreneurs, shoot high, but do your research, because you don't want to ignore the opportunities right in your backyard.