RELATED TOOLS RELATED ITEMS Student Power, Part 1 Finance Archive

Colleges are a fertile place for young entrepreneurs. The rich stew of on-campus resources also sustains business development. Budding entrepreneurs have libraries and technology at their fingertips, often with free research assistance. They can find mentors, advisers, and potential partners -- otherwise known as fellow students. And faculty often serve as liaisons to potential investors.

Cornell, Harvard, Yale, and Loyola Marymount are setting up incubators right now. David BenDaniel, a professor of entrepreneurship at Cornell University, says one reason the university is doing so is to ward off exploitation of students by venture-capital firms that take as much as 80% of equity in return for seed capital. The incubator will be run by students and furnish about $10 million in very-early-stage funding. "We will train students in venture capital, transfer some technology, and make some students rich," BenDaniel says.

At Yale, a new incubator, Aquarium Ventures, is a business in itself, launched early this year by Michael Stern, 20, then a sophomore majoring in political science, and Peter Venech, 18, then a freshman. Aquarium takes a 30% to 50% stake in the companies it helps. So far, it's working with two businesses and is in discussions with four others. One motivation is to help the city of New Haven. "There is so much talent that comes through New Haven that I don't see why it can't stay," says Benjamin Karp, a PhD candidate in history. His venture-capital firm, Dagim Capital, invested in Aquarium and has launched Dagim Consulting Group, which works with advanced startups.

MATTER OF COURSE. Finally, schools are trying to accommodate student entrepreneurs in the course work itself. For instance, graduate business students at the University of Illinois and Wharton can earn credit by doing independent study that involves starting a business. "We and other colleges need to routinely make it a course," says Gerry E. Hills, who holds the Coleman Chair of Entrepreneurship at the University of Illinois in Chicago. But should students really be running businesses while trying to get an education -- or for that matter, getting an education while trying to run a business?

Some professors believe that college and graduate-school students should use school to learn their strengths and weaknesses and then use their first jobs to work on their weaknesses. "This kind of on-the-job training is very, very expensive," says Steven Rogers, professor of entrepreneurial finance at the Kellogg School of Management at Northwestern University. "Learn what you don't know at someone else's expense."

Not surprisingly, the campus entrepreneurs see things in reverse: School, they feel, is holding back their businesses. Michael Saunders, 23, founded campusfood.com, an online college restaurant order-and-delivery service, in his junior year at the University of Pennsylvania, but he didn't have time to expand to more campuses. "It hurt to wait to gear up. I could have done it so quickly if I'd done it full time." Right after graduation in the spring of 1998, he began the rollout. By January, 2000, the company was serving 18 colleges. By the fall, it will have 300.

DISTRACTIONS. While most student entrepreneurs grind away on two tracks, neglecting their studies, a growing minority simply drop out. Jason Stowe, 22, quit Cornell in 1997 to build his new computer-graphics company, Immersive Technologies, because he was afraid the competition would bypass him. "I left because entrepreneurship is about getting things done, and I didn't want to be in a situation in which there would be a conflict of interest between the business and personal needs for classes," he says. "You have a tremendous amount of distractions while you're in school, and you can't stay on top of things."

Others students choose to accelerate. Michael Applebaum, 22, and his partner Jeffrey Garvett, 22, had two more years to go at Georgetown University in 1998 when they started Illumix Software. The business started to post revenues in 1999, just about the time the pair came up with a second business idea, VitalContact, an Internet marketing service for businesses. When they got close to striking a deal with an angel investor last November, Applaubaum says, "We knew we needed to be out there devoting all of our energies to this. We had all of our credits anyway." So they quickly arranged to graduate last December instead of waiting for June.

Though they're now full-time entrepreneurs, some things still haven't changed. Applebaum and Garvett remain roommates in a two-bedroom apartment that serves as headquarters for Illuminix and its six computers. "The office is in each of our bedrooms and a middle room," where a new employee, a programmer, works, Applebaum says. If they want to work in the shower, maybe they'll look for an incubator.

WORDS OF WISDOM. A sampling of professors shows that they're split about the value of putting the business cart before the education horse.

Mark Fraga, head of entrepreneurship center at Wharton, says "We encourage students to think about business school as kind of an incubator or accelerator."

But Steven Rogers, entrepreneurship finance professor at Kellogg, strongly disagrees. "I'm not an advocate of students starting businesses while in college or while in business school," he says, "and furthermore, I am not an advocate of them starting a business immediately after graduation." Why? Rogers explains: "I don't believe the world is going to end relative to opportunities. This is not a sprint, it's a marathon. Everything doesn't have to happen tomorrow.... You have to understand it's hard."

Siding more with Wharton's Fraga is David BenDaniel, entrepreneurship professor at Cornell, who says: "Waiting to graduate is the phenomenon that happened four-five years ago. Things are moving too fast. These guys are bright, they're very employable. The experience of doing this is probably a plus."

Hilary Rosenberg, a former assistant managing editor at Institutional Investor magazine, is a freelance writer in New York. She is the author of two books, The Vulture Investors and A Traitor to His Class, about shareholder activist Robert Monks