US and Canadian Business schools are tempting students to pursue entrepreneurship as a career path with new seed funding schemes, as more MBA students launch start-up businesses.
The venture capital industry in North America is stronger than in Europe but the region’s business schools are helping to finance early-stage companies by offering equity-free cash investments.
A new scholarship for MBA students offered by Canada’s Sauder School of Business is valued at $15,000. The New Venture Scholarship, available for 2015’s intake, offers half of that grant money as seed funding, meaning MBAs can bank an initial investment of $7,500.
The business school, based in Vancouver, will offer 10 scholarships as part of its Innovation and Entrepreneurship track, which up to 15% of its MBA class now opts for.
Despite the provision of blue-chip funds in the US and a drive to grow the venture capital industry in Canada, many graduates still find it challenging to secure initial investment for their start-ups. Laura Rojo, director of recruitment and admissions at Sauder, agreed: “Sometimes the first investors are the hardest ones to find."
But there has been a global increase in the number of MBA students opting for entrepreneurship as a career path. “Around half [the students] going into the track have clear goals. They have an idea already and want to develop a business plan during the MBA and launch a venture after graduation,” added Laura.
Georgetown University in Washington, which has one of the US’s highest-ranking business schools, will offer “Startup Stipends” to assist graduating students with launching an entrepreneurial venture. The recipients can use it to support start-up costs – in whole, or in part to fund their student loan payments.
Jeff Reid, director of the Georgetown Entrepreneurship Initiative, said that the stipend will ease the pressure on recent graduates who want to start-up a company.
“I often talk with Georgetown students who tell me they would love to pursue an entrepreneurial opportunity, but they are prevented from doing so because of their immediate obligation to start paying their student loans,” he said.
The funding is provided by the Schramm family, which is involved with UP Global, an organization which fosters entrepreneurship.
In addition to monetary assistance, the stipend recipients will also receive mentoring, programming and networking opportunities. It is thought to be the first of its kind.
Other business schools run venture funds which invest directly in companies, and MBA students often join these funds’ management teams to garner experience.
“Entrepreneurs provide huge value to society by solving problems, creating jobs and growing the economy,” said Jeff
“If students are worried about making monthly payments, they may be more likely to take a job they are less passionate about,” he added.