On college campuses across Rhode Island, new ideas are brewing. Tech-savvy students with an entrepreneurial spirit are coming up with business concepts.
Many will go nowhere. But others could be the next Facebook, a revolutionary drug-delivery platform or the must-have electronic toy of 2011. Nurture these young minds, many believe, and their startups could help transform the Rhode Island economy.
That is what BetaSpring, a joint effort by local “geek” leaders Jack Templin, Allan Tear and Owen Johnson aims to do starting next April: provide a seed venture platform for 20- to 26-year-olds who, with expert help and a little money, could launch successful companies.
PBN: What led you to develop BetaSpring?
TEAR: I started out by being a venture-funded entrepreneur. I started in my late 20s [and co-founded three companies]. … When I formed Aptus [Collaborative] I really began advising startups on a day-to-day basis, being on the board and helping them think through strategy, get funding or launch their new products, and started doing that on a company-by-company basis. … A few years ago, I started working with Jack and Owen on overall community-building in Providence, and that’s what brought all the threads together.
PBN: What inspired BetaSpring?
TEAR: We watched the YCombinator model, which is the original pioneering model for this micro-seed venture capital, we just said, that formalizes and pours the gas on what it is we’re interested in.
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PBN: What about that model works so well?
TEAR: It’s taking advantage of some really profound shifts in technology-driven marketplaces, and that is that there are more tools available at a cheaper price, and you can access talent regardless of geography in a much quicker way. All of those factors that have come from globalization and interconnectivity and the maturing of technology platforms basically have made it much cheaper to start companies.
PBN: That’s been the case for a while in the Web arena.
TEAR: But it’s moving very quickly into mobile, into traditional software – which is being blended and disrupted by people offering software as a service – and my belief is that it’s going to move into life sciences and physical products and other areas.
PBN: What kinds of companies are you targeting with BetaSpring?
TEAR: What we’re taking advantage of is Internet software, mobile and Internet-enabled distribution. Those are the places where we know the cost-model works. It costs a lot less to start a company; the same company that I started with $2 million in 1999 I could start for $250,000 today. What that means is that one of the big barriers to starting a company used to be access to capital. Now it’s talent and the ability to execute. So you can start lighter-weight companies, and they tend to favor youth, because young entrepreneurs can work like hell, they can go fast, and if they fail fast, it feels OK for them.
PBN: Where does BetaSpring come in?
TEAR: We’re giving these entrepreneurs a chance and really harnessing the power of numbers. We’ll create a community of entrepreneurs, get them together almost in a class, 10 companies at once for a 12-week program … and you expect a rather high failure rate.
PBN: How will you recruit?
TEAR: If you look at YCombinator and TechStars, there’s a global conversation going on all the time about technology and good ideas, and how to start a company, so part of it is inserting BetaSpring into that conversation. Part of it is drawing on the base of students we have here … and we have connections and can use them to find the local talent. But the other programs have a high percentage of nonlocal applicants, 60 to 80 percent.
PBN: Where is the money coming from?
TEAR: We’re raising a private fund from investors … on the average of $20,000 per company. Some companies may have a little money already, so they may use this to buy servers or hire another developer. … It’s only meant to last them the 12 weeks they’re in the program. … There will also be a “clubhouse” space, a shared co-working space that companies can use but are not required to. … And some companies may come up with a viable business concept with that $20,000, but the majority will probably go through an angel-round of funding, which is what we’ll put together for them at the end.
PBN: But money isn’t the biggest value here.
TEAR: No, it’s the weekly encounters with successful entrepreneurs who solved all the problems that you’re about to encounter. It’s clearing out all the initial corporate structure so you don’t spend three or four weeks as a first-time entrepreneur trying to figure that out … and it is the connections to prequalified investors on the other end who are interested in participating because they want a better-quality pipeline.
PBN: Is this a business or a nonprofit?
TEAR: It’s a business. We get our return by taking a small amount of equity in the companies as founder stock. And as those companies become profitable, buy out their early investors or get sold, we create a positive return for the investors and for the partners in BetaSpring. •
