The Real Reason Why Undergraduate Entrepreneurship Matters
When my cofounders and I arrived at Johns Hopkins, we were shocked to discover the lack of support for undergraduate entrepreneurs. There was no entrepreneurship club, no community space, and no incubator for student ventures. In response, we founded TCO Labs, a nonprofit that does all of those things and more.
Yet the initial shock at the lack of an undergraduate entrepreneurial ecosystem stuck with me, particularly because the university had just invested millions of dollars into Johns Hopkins Technology Ventures, the university arm focused on tech transfer and commercialization. Given this great institutional emphasis on innovation, where was the student ecosystem?
Over our first few years here, we watched as the Johns Hopkins innovation ecosystem was constructed into a robust infrastructure of funding, support, and connections to the greater Baltimore business community. But when the dust cleared and you could finally see what was built, it became obvious that students — undergraduates especially— were left standing on the outside.
Of course, students could tap into the resources offered by JHTV, but only as visitors and only on their own initiative. Inclusion in the ecosystem necessitated an extremely viable commercial venture, rare among unguided undergraduates. The system had simply not been structured to include them. It was only an afterthought when an extension was built around students.
(None of this is to disparage the efforts of JHTV or FastForward U, the new student-focused arm of the organization that has done amazing things for the ecosystem at JHU. It’s merely a note on how we got here. When ecosystems start with tech-transfer offices, as Hopkins did, it is common for the student benefits to come much later. Just take a look at the initial report that underlies JHTV, and how often it mentions “undergraduate.” Hint: 5 times in 64 pages)
Why were students not the primary focus in the university’s investment?
In the construction of university entrepreneurial ecosystems, it can be easy to overlook undergraduates, and it takes no complex analysis to understand why. For sustainability’s sake, top-down (university-run) innovation organizations must be returns-focused, and thus returns-driven.
And where is the money? In the patentable, licensable technologies coming out of the labs of professors, and perhaps enterprising grad students or post-docs.
You cannot be ignorant to the fact that undergraduate companies are not the money-makers of university innovation ecosystems. Because of this, it can be hard to make a convincing argument for why a university should pour resources into supporting them, especially when those resources can be put towards more commercially-viable ventures.
Undergraduate ventures tend to fall into three categories:
1) Side projects, which fall by the wayside come midterm season
2) Sub-par ideas, stemming from a lack of nuanced business understanding
3) Fantastic ideas, that need a full-time team with full-time focus to take them to market
There is, indeed, a fourth category: Fantastic ideas, that make it successfully to market at the hand of exceptionally driven students. (Examples of recent JHU student-founded startups in this category include Proscia, FactoryFour, and Sunrise Health, among others). These, however, are a small minority.
Of course, the goal of a undergraduate entrepreneurial ecosystem is to produce more companies in the fourth category. However, students with ventures in this category are likely to take their ideas to market with or without the support of a robust university entrepreneurial ecosystem. They are just that driven.
So inevitably, players in undergraduate innovation ecosystems are going to be dealing mostly with the first three types of ventures. Even though the majority of these will never see incorporation, much less a Series, the importance of fostering them cannot be overstated.
Poetically, the rationale for this traces back to the purpose of our great universities in the first place: Education.
Why do we insist that medical students cut into hundreds of cadavers before ever stepping foot near a patient? Because we want to make sure they know what they are doing when the stakes are real. It is the same with ventures.
If you teach students about entrepreneurship now, while they are still in the safety net of their university, they can hit the ground running when they have their next brilliant idea out in the real world. They can focus less on learning the fundaments of entrepreneurship, and more on getting their idea to market.
If you can teach students how to navigate the perils of launching an early stage company; if you can show them the ropes of team-building, entity-formation, and fundraising; if you can instill in them the grit and sacrifice needed to be an entrepreneur; and if you can do this all on a ‘practice’ venture, you are perhaps saving the life of their next, more promising idea.
The purpose of supporting undergraduate entrepreneurship is not to produce ventures, it is to produce entrepreneurs.
If this is the case, why isn’t entrepreneurship simply incorporated into the academic curriculum? In short, at universities with robust ecosystems, it is. But at universities with developing ecosystems, it can be hard to convince educational staff and faculty of the importance of integrating entrepreneurship into a packed curriculum.
The most pervasive reason for this, at least in my experience, is the belief that entrepreneurship is best learned extracurricularly, due to its largely experiential nature. Then, there is the opportunity costs of resource allocation. The resources that would go towards entrepreneurial curriculums often have to come from somewhere else, a sad but true reality. Given already overworked faculty and staff, creating a robust entrepreneurial curriculum is often of acknowledged importance, but limited action.
Aside from the education of the next generation of entrepreneurs, there are many secondary benefits to supporting undergraduate entrepreneurship. First off, a robust ecosystem is going to help even fourth-category ventures. While fourth-category entrepreneurs are able to navigate getting to market alone, extra funding and mentorship never hurt anyone.
Secondly, fostering student entrepreneurship can potentially foster stronger alumni ties down the road. When an alumnus becomes a successful entrepreneur, they can look back on the university that supported them in their early days and perhaps feel compelled to give back to the next generation of student entrepreneurs.
However, if an alumnus had to navigate launching a venture entirely alone as a student, they are perhaps less likely to feel a connection, much less an obligation, to support the university. (On the other hand, they may feel compelled to make sure no other student has to go it alone, and are likewise motivated to help. If this is the case, a developed ecosystem is necessary to provide points of engagement.)
Even if undergraduate companies never produce a commercial return for the institution (which is a strong possibility given that undergraduates are the only university affiliates with exclusive rights to their IP, at least at Hopkins), creating a robust undergraduate entrepreneurial ecosystem has a final, significant payoff for universities: attracting the best students in the first place.
One of the stories that lit a fire under me to start TCO was that of a high-school senior who was deciding between Johns Hopkins and Michigan State. Despite equitable costs of both, the student chose Michigan because of their fantastic entrepreneurial ecosystem. Hopkins, in turn, lost an extremely promising student.
The same story was reiterated when a friend of mine, an immensely talented student-entrepreneur, considered transferring out of Hopkins to Michigan after his freshman year due to frustration with the lack of entrepreneurial support. (Thankfully, he was convinced to stay, and is one of our golden student entrepreneurs. Check out his company here).
Having a robust entrepreneurial ecosystem doesn’t just appeal to the relatively small number of high school students that are looking for one: it is also reflected in university rankings. Forbes, in particular, places a high degree of importance on entrepreneurial ecosystems.
(I know this because I was privy to the Forbes self-reporting form sent to JHU. The Entrepreneurship section made up a significant portion of the entire form, along with categories like Student Life and Academic Support. Perhaps this is why JHU is merely 30 on the Forbes list, as compared to hovering around Top 10 on other lists.)
If a university is to ignore the educational benefits of a robust undergraduate entrepreneurial ecosystem, they cannot ignore the reputational benefits. An explanation is not needed for the importance of attracting new talent to the university each year.
The fact that undergraduate companies are not the primary money-makers for university entrepreneurial ecosystems is unlikely to change. What can change is the focus that universities place on building stronger undergraduate ecosystems. To do so requires universities to look past short-term returns, and to understand value in terms that transcend dollar amounts.
And that requires an understanding of the real reason why undergraduate entrepreneurship matters.
