When six Northeastern seniors found themselves stalling at actually starting their startups, they knew they needed to take action — an action that would not only help them, but help fellow students at Northeastern. So, they approached the then dean of Northeastern’s College of Business Administration Thomas Moore with one big idea: IDEA, Northeastern’s student-run venture accelerator program.
The purpose was to take the business school’s knowledge of venture creation and turn it into something tangible that aspiring entrepreneurs could use campus-wide. What Northeastern lacked was a resource where students could build their business plans, meet co-founders, receive introductions to venture capitalists and gain access to funding. IDEA was designed to fill the void, and in 2010, they began to do just that.
The process started with the IDEA Business Planning Guide, a tool that helps ventures outline their business plan and segment it into various milestones, whether they be prototyping, marketing or tackling the issue of funding. To help teams with the last problem, IDEA created “Gap Funding,” which commits up to $10,000 in capital to qualified ventures.
Senior Christopher Wolfel, IDEA’s current CEO, claims they base funding on five criteria: Quality of solution, quality of market, the venture’s business model, the impact of the team’s milestones and the quality of the team. “It’s not a T-shirt versus a robot company,” Wolfel says. “Looking at those five buckets helps level the playing field.”
To Wolfel, the traditional business plan competition doesn’t work, and so, alongside his team and faculty advisor Dan Gregory, he decided to design a business plan competition that wasn’t a competition. “When we fund someone, we double up on efforts,” he admits. “A lot of people are just chasing that money, and if they don’t get it, the chances are a little bit higher of them giving up.”
Although all of the $100K contests out there serve a great purpose in helping foster entrepreneurship, IDEA wanted to make sure they stuck with teams beyond the few months they’re iterating their product for the competition’s finale. They also wanted to make sure companies are given the chance to work at their own pace. Despite having some form of a deadline, Wolfel claims, “Some ventures who have their own time can progress through the program faster.”
When those ventures want to apply for funding, however, they need to face a four-student investment committee, who provide feedback to those pitching before them. “It’s about getting students involved in the whole process,” Wolfel says. “And we feel like it’s a lot more realistic to how the process would work. Unless you already won the MIT $100K, you won’t just walk into a VC office.”
Peer-to-peer learning comes first, and even if teams don’t receive gap funding, they do receive a follow-up meeting where they can speak with the committee and find out why they didn’t get funded and how they can improve. Yet, for those who do receive gap funding, there’s no limit on how much they can accrue. “We’ve funded two different ventures two and a half times,” Wolfel says, referring to the idea that not every investment round needs to total $10,000. And once teams are funded again, IDEA’s efforts re-double, because they place another mentor and advisor on the team, and make sure the venture has all the service providers they need to get to the next step.
Wolfel mentioned Apifia, one of IDEA’s portfolio companies that’s focused on creating social applications. After IDEA funded their business plan with $10,000, the team was able to get to their beta. IDEA then re-funded them. “We know that $10,000 can’t get you from idea to a three million dollar investment,” Wolfel admits. “Yet, this forces teams to get thrifty and crafty.” On the bright side, however, Wolfel says they’ll be re-launching their other fund, the Prototype Fund, this fall. That budget’s growing to $35,000, while the gap fund will grow to $210,000 for the next calendar year.
Later this year, IDEA will also start working with Northeastern’s recently announced Center for Entrepreneurship Education. Any ventures that come out of the center will now roll into IDEA. Companies working with Northeastern’s Center for Research Innovation will also be able to work with IDEA as well, who can help them commercialize and license their product out.
What’s important to Wolfel is to see IDEA grow. Within two semesters, 45 new ventures jumped on board. “For me, it’s also more rewarding than class, because it’s real,” Wolfel says. “Every venture’s goal is to make this their real company.” And if, for some reason, those companies don’t succeed, at least students have the opportunity to become better employees at their next startup endeavor. “IDEA is an educational program when it comes down to it,” Wolfel admits.
Although a lot of schools have their own venture accelerator programs, most of those programs aren’t student-run, which is what sets IDEA apart. “Most schools are afraid of it,” Wolfel says. “Every year, even every semester, there’s a ton of turnover.” Wolfel recounts nights where he’s stayed up all night just trying to think of who the next marketing officer for IDEA should be, or how he’s going to fill in the position of the student going on co-op in China. “But, we embrace that,” he says. “Because everything keeps getting different and bigger.”
For a peek inside IDEA’s portfolio, here’s a look at some of their companies with pitches from the companies. And for even more of IDEA’s companies, click here.