Joe Walker ’09, president of the Yale Entrepreneurial Society — a student nonprofit organization that aims to increase awareness for and support of entrepreneurship on campus — sat down with the News to talk about student business plans in face of the current economic downturn and the development of YES as it approaches its 10th anniversary. The group’s annual Y50K Program, for which applications were due last Monday, offers one team $50,000 to put their business plan into action.
QWhat is the climate like right now for self-starters and student entrepreneurs? Are more students looking to start their own business?
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AIt can go one of two ways. In some sense, we’ve seen almost more people interested in entrepreneurship because they haven’t had the job offers that they wanted or it’s really competitive to get into grad school now or something. They’re thinking, ‘Well, I’ve always had some ideas. Maybe this is the time to go and start a new business.’ So from that perspective, there are even more people interested than there have been in the past. At the same time, people are spending less money, so if you have a new product or service it might be difficult to get a lot of new customers right off the bat. Certainly venture capitalists are not investing in the new ventures the way they have, so there’s no doubt its challenging.
We’ve had kind of a steady increase in interest in YES: Last year we had 30 entries to the competition, this year we had 42. We saw the same thing, too, with the Yale Entrepreneurship Institute. They saw a significant spike in applicants for their summer fellowship this year.
QWhere does the money come from to fund the Y50K business proposal competition? How is YES able to sustain this sum given the recession?
AThe competition has changed this year. In previous years, all the money that YES has raised has come from corporate sponsorships. Typically we used to raise a certain amount of money a year that was sustainable and that would cover the cost of the competition and everything. This year, obviously, some of the sources that we used to have are bankrupt, some have given less and there’s generally a tightening of belts. So we thought this was a great opportunity to maybe change the structure of the competition: We wanted to say, with our 10th anniversary coming up, that we were making an even stronger commitment to starting new businesses, to having these winners go on to actually starting their companies. So, instead of taking that $50,000 and splitting it up over three different divisions, we’re going to have one $50,000 prize.
We thought this would be a great opportunity to actually go and pitch a business to a venture capital fund. The way it’s being funded this year is through a $50,000 convertible note which is a financial security that has both debt and equity components — it’s a loan that has a low coupon rate for the investor and at a certain point they can convert it into equity in the company at a discounted rate.
QWhat kinds of entries have you had in the past and where have they gone? Where are past winners now?
AOver the last couple of years there have been many Web-based projects. Last year though, there were a lot of clean technology entries, for example there was one working with desalination technology, and there were two involving new windmill technologies. There was also jetEye, which produced technologies that made jet engines more stable and efficient. One of our favorite business plans has been a fair-trade organization called Mercado Global that works with women’s cooperatives in Latin America to sell their handmade products at a fair price in the United States.
QWhat can or does YES do to encourage Yalies to stay in New Haven after graduation, to keep their business plans local so as to help develop the city?
AThis can be challenging sometimes. When YES began there were no resources available on campus for entrepreneurs and so our job has always been to advocate for and to encourage the University to provide these resources for young entrepreneurs. There are now all these resources that weren’t available 10 years ago. I mean, look at all the great things that we’ve had going in Science Park. And in the last nine years through the Y50K competition YES has given half a million dollars to student ventures in New Haven, which has helped boost New Haven’s economy.
QWhat advice do you have for any budding entrepreneurs looking to enter the competition? What sort of business plans does the YES board like to see? What makes a good business plan?
AMy main advice would be to take advantage of the resources Yale now offers. YEI offers you any mentor that you could ever want – all you have to do is fill out a form online. It’s actually pretty impressive. So what we’re looking for in a business plan is basically a really good team — you can have a great idea, but if there’s only one person, that’s not as good as a great team that really works well together. If you can get three or four really good people in a room together, an idea can succeed. We facilitate this through holding teambuilding sessions with pizza several nights at Naples.
Getting mentors and advisers involved is always a good idea as well. One question we always ask is, “Is there any grey hair involved?” This allows you to kind of bounce ideas off someone.