Can universities justify investment in startups?

In 2014, one thing is certain when looking at the way universities in Australia are beginning to support their students in the area of entrepreneurship: No one really knows if they are doing the right thing.


One of the reasons is that we are still too early in the game. No university in Australia has formally dedicated resources to supporting student owned startups (i.e. startups where the university holds no equity stake) for long enough to know.


If the university is not asserting ownership over students intellectual property nor taking a percentage of equity in their startups, a question needs to be asked: How can the investment in providing people, services and other resources be justified?


Here are three medium to long term reasons why this investment by universities makes sense:


1. Student recruitment and differentiating the student experience


International student recruitment has been the key source of revenue generation for universities in Australia for a long time. Having served on the front line of international student recruitment for both an Australian university and as a service provider to the sector, I have worked closely with the stakeholders in marketing to international students. These stakeholders include student recruitment agent partners, schools and foreign universities.


It has been the case for at least the 14 years I’ve been around that beyond the various groups, alliances and unreliable rankings, Australian universities have a tough time differentiating from each other. This is before the strong competition from other traditional destination countries (US, Canada, UK) and increasing competition from within Asian countries too.


There were two common questions among parents of students ready to hand over their savings to invest in their child’s education. The first was “what kind of job and salary can my daughter get if we pay for her to study at your university?” The second was “what internship and work experience options does your university offer?”


The only more common questions were regarding scholarships. In 2014, a good internship and promise of starting salary is not enough to stay competitive. There is an opportunity now, leveraging student entrepreneur and startup support, to offer something more to these potential students and their parents.


Whether or not a student continues an entire career of entrepreneurship or tries, fails and learns from a startup journey before going for a safer graduate job, there is one key question to consider. If you were the person hiring new graduates for a role in your company, would you choose the student who has experienced running his or her own business or a student that has not?


2. Engaging industry and alumni for the one cause: student entrepreneur success


Universities in Australia are struggling to engage both alumni and industry to the same extent it happens in the US.


Whilst alumni and industry are very different challenges, for different reasons working with innovative students brings real benefits to all involved.


Whether it be big companies working with universities in running competitions and hackathons, or a university nurturing a network of alumni and then matchmaking alumni mentors and new student entrepreneurs, the results can be win-win-win.


Innovation for big companies, unique experiences for students or pre-backed startup companies for students, alumni and industry can all be bi-products of these activities.


Once a university has a track record in this area, could the perception of that university change to mean it has become “a place to collaborate” and “a place where innovation happens”. If yes, then this alone validates an investment in student entrepreneur support both financially and in value of reputation.


3. Building an army: 10 years means 10 cohorts of students with a reason to give back


Longer term, of course, is the same reason US powerhouses like Stanford and MIT do this.


Supporting hundreds of student startups year-on-year can only mean planting seeds for future “good will”.


The hypothesis says that when a student entrepreneur “graduates” to become a billionaire global success story, she will remember also the little university back in Australia where it all started.


She will naturally want to “give back” a donation to the new batch of budding student entrepreneurs who hope to be like her one day.


Encouragingly this is already starting to happen, if only anecdotally. For example, the generous Mr. Michael Crouch has recently gifted a large donation which has resulted in the soon to launch Michael Crouch Innovation Centre at UNSW.


So with these three examples alone, do the potential benefits in investing in free support for student entrepreneurs outweigh the risks for our universities?


Perhaps the greater risk greater is not making that investment.


Joshua Flannery is Student Entrepreneur Development, International Education


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