For B-School's Entrepreneurship Program, a 10 Percent Solution

Clarkson University has a new model for attracting and developing young entrepreneurs: free tuition for a stake in the company

Matthew Turcotte, right, meets with Clarkson University business school professor Marc Compeau. As part of Clarkson's Young Entrepreneur Award program, Turcotte is giving the school a stake in his Web development business in exchange for free tuition. Clarkson University

By Alison Damast

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Over the past few years, Clarkson University President Tony Collins and members of the business school faculty had been thinking of ways to strengthen the school's entrepreneurship program. Clarkson's undergraduate business program had a strong focus on entrepreneurship, but the school wanted to attract more top-teen entrepreneurial talent to campus. The problem was finding the students.

The Clarkson team tackled the problem like businessmen, coming up with an unusual concept: exchanging tuition—which can cost close to $150,000 for four years—for an ownership stake in the incoming student's business.

"We think we can take young entrepreneurs and make them better entrepreneurs, but we are a private university and we are not inexpensive," says Timothy Sugrue, the business school dean at Clarkson (Clarkson Undergraduate Business Profile), a private school in Potsdam, N.Y. "If tuition is what is standing between us doing that, then the idea of trading a portion of a student's company for tuition and a little help making it stronger seems like a win-win."

They ran with the idea, establishing a Young Entrepreneur Award program last fall. The program looks for a handful of students each year who have started their own companies and recruits them to the school. Students selected for the award receive enough financial aid to cover tuition and allow the university an equity stake in their business venture. Marc Compeau, director of Clarkson's Center for Entrepreneurship, says the school believes it's the first to develop this type of program.

"We've looked pretty hard, and we can't find any other university engaging in this type of an exchange," he says.

A Web of Websites

The first student the school selected for the program was Matthew Turcotte, 18, of Clayton, N.Y., who started his own Web development company, North Shore Solutions, when he was 16. He started by designing a Web site for his uncle's business and was soon building websites for other small businesses in his town, eventually expanding his client base to businesses all over New York, California, and Canada. His accomplishments attracted the attention of Collins, who saw Turcotte on the local news promoting a book he'd just written titled, From Main Street to Mainstream: The Essential Steps to Launching Your Small Town Business Online.

That fall Collins invited the high school senior to his home for dinner, where he and Compeau presented him with the concept behind the Young Entrepreneur Award program. In exchange for a portion of his company, the school would give him free tuition, free office space, and mentorship from Clarkson business faculty and successful alumni.

For Turcotte, the offer proved to be irresistible. Clarkson was one of his top choices, but he knew it would be a financial challenge to attend a private school without taking out massive student loans, he says. His parents were initially wary of the idea, but he says he convinced them it was the right move for his career.

"It was either I could take this opportunity or end up going to my local community college," Turcotte says. "For me, it was my ticket to go to the university I wanted to go to."

Structuring the Contract

Once Turcotte agreed to enter the program as a full-time student in the fall of 2010, the next challenge was figuring out how to structure the agreement between him and the university. Both sides brought in lawyers as they hammered out the contract, eventually working out a deal that allowed the university to buy about 10 percent of his company, acquiring 1.25 percent each semester that Turcotte attended the school.