With a little seed capital, some promising ideas generated by students in the Hatchery entrepreneurship program at the John M. Olin School of Business might grow into big businesses. That's the thought behind the Skanda-laris Seed Capital Fund, established at the business school through a $1 million pledge by Mr. and Mrs. Robert J. Skanda-laris of Bloomfield Hills, Mich., as part of the Campaign for Washington University.
"I know firsthand that having sufficient capital at the right time can spell the difference between success and failure for a new business," said Robert Skandalaris, an entrepreneur himself. "My wife, Julie, and I wanted to supply early, upfront funding for promising Hatchery students, helping them cover startup costs until they can secure venture capital funding for the long term."
Skandalaris is himself a venture capitalist, funding companies through BlueStone Capital Partners, TRADE.COM, E-Grad.com, Big Net Inc., Noble International Ltd., three bank holding companies and Twenty First Century Advisors.
The couple's daughter, Kristin, is a sophomore in Arts & Sciences at the University.
Since its inception in 1997, the entrepreneurship program has "hatched" numerous successful ventures, ranging from The Ice King, selling a frozen confection at shopping malls, and bare ware, a distributor for custom T-shirts, to everbank.com, an Internet bank and SmithCenter, manufacturers of organic outerwear.
The fund's investments in promising student businesses will typically be between $10,000 and $20,000, although smaller and larger investments may be made at the discretion of the Hatchery Advisory Board. Generally, one or two plans will be approved for investment yearly, though it's possible that no plans will be funded in a given year.
Participants must be current business students or recent graduates -- within the previous two years -- who are majority owner(s) of the venture. Also, participants must have enrolled in the Hatchery and completed the business plan through it.
If the advisory board approves a business plan for investment, students must incorporate the business before the investment is made, and the percentage of ownership in the venture represented by the fund's investment will be negotiated on a case-by-case basis. Recipients must make regular financial reports to the advisory board, which will oversee the investment fund.
Dean Stuart I. Greenbaum said the fund will greatly benefit the school in several ways. "Offering students the prospect of receiving funding, thanks to the Skandalarises' generosity, will no doubt stimulate the entrepreneurial spirit of our students and attract greater numbers of entrepreneurially minded students to Olin," he said. "In addition, the first 3 to 5 percent of earnings from the fund will create Skandalaris Scholarships for deserving Olin students."
About 10 other top business schools have similar funds, but Olin is the only one to have both the Hatchery program and a seed capital fund, according to Barton Hamilton, Ph.D., assistant professor of economics and management and director of the Hatchery. "Our students are very enthusiastic about the seed capital fund, as well as about what they learn through the Hatchery," Hamilton said. "It's one of our great experiential learning programs. Everyone enrolled in it can apply what they've learned in financial analysis, strategy, organizational behavior, marketing and/or other business areas, as they work, usually as part of a team, to create a business plan for a new venture.
"Maybe one out of 20 ideas funded will end up a home run, something like a Microsoft," he said.
