How to finance and fund your student business project
As a student, financing your new business brainwave can be tough. The loan is spent, the parents’ coffers are slim, banks aren’t interested unless there’s a mansion as collateral and most investors won’t bother until you’ve graduated. With a bit of research, however, you’ll find there are plenty of organisations willing to assist you with getting your new venture off the ground.
In 2013 while studying for an A-level engineering project George Edwards’ teacher, a keen caravanner, mentioned the persistent problem of not knowing when his gas bottles were going to run out. This comment proved to be Edwards’ ‘Eureka!’ moment.
Globally, millions of gas bottles are used in the leisure industry, domestically and within industry. Yet, with no way for consumers to monitor gas usage, aside from inconvenience, there is enormous annual wastage. Realising that aside from expensive and not entirely reliable pressure and weight gauges there was nothing on the market to solve this problem, Edwards’ set about developing a solution as part of his coursework.
Cue Gas-Sense – a magnetic strip that can be attached to any gas bottle and transmits real-time data on gas consumption to a smartphone app. The app can also predict how much gas will be required for specific journeys and even remotely notify users if they have left the gas on by mistake.
“The project was really exciting because of the range of engineering involved,” says Edwards. “The magnetic strip, made from neoprene and magnetic backing, is semi-flexible so it fits the bottle properly and involves some interesting mechanical engineering. Then lots of electrical engineering for the temperature sensors to get them accurate and also software when writing the algorithms to get the strip to talk to the app and for the app to give personalised data.”
Edwards entered his concept into the Young Engineers For Britain competition and on making it to the finals exhibited at the Excel Centre in London.
“I was completely inundated by people saying they wanted one for their barbecue or holiday home and giving me their cards saying if I ever made them they’d be really interested,” he says.
Fired up and determined to turn his idea into a commercial product, Edwards realised that he didn’t have a clue about how to start a business.
“It’s a lot easier when you’ve left university armed with a network of contacts, but when you’re 17 with no proven track record it’s a bit more tricky. I tried a few venture capital pitches, but when you’re constantly questioned about why your business will work or why you are the right person to lead and don’t have any evidence to present, that route doesn’t work,” explains Edwards.
After conducting a huge amount of research Edwards found Virgin StartUp – Richard Branson’s not-for-profit company for entrepreneurs.
“Virgin StartUp was amazing,” says Edwards. “It lent us some capital so that we could actually get moving, develop patents and have something to actually show.”
Edwards also sought assistance from The Royal Academy of Engineering Enterprise Hub, which provides funding and support to entrepreneurs turning their engineering innovations into successful businesses.
“The Enterprise Hub has been fantastic in providing credibility and giving access to a wide range of fundraising, mentoring and educational networks. The exposure generated from the weight of their endorsement has helped on all fronts of the business. Its bespoke support has provided confidence in all the areas I wouldn't otherwise know about, such as recruitment and PR,” states Edwards.
When the Gas-Sense project was in shape Edwards set up a successful crowdfunding campaign until his business grew to the extent that it could use its own capital for funding.
Now with a staff of eight, Gas-Sense sells most of its products online in America and is planning a European launch this spring. It also does consultation work with factories and one-off industrial projects.
While targeting a leisure community who can afford the £39.99 price tag, the now 20-year-old Edwards is looking to produce a cheaper version to serve large rural communities in Africa, Asia and South America.
“In the developing world, people often burn tyres and other biomass, with poor extraction which causes respiratory problems that kill more people every year than AIDS,” Edwards states. “Propane gas is the best fuel to use because it’s cleaner and easier to distribute. It’s an important area that we’d like to support.”
While Edwards was brave enough to go straight from school into business, for those who’d prefer to start-up via university there are a huge number of support systems in place in the UK – either within individual universities or membership organisations run by students for students like the National Association of College and University Entrepreneurs (NACUE).
“We work with colleges and universities all over the UK supporting student enterprises,” says NACUE ceo Holly Knower, who herself only graduated in 2012. “It may be individuals already working on start-ups or students that have a passion for enterprise but are not sure what field they want to go into. We encourage them to work within a creative and safe environment of their institutions while still identifying their niche.”
“We are very passionate about young entrepreneurs being ready to play the market and being employable as possible,” continues Knower. “We give students the opportunity to fully develop the core skills that will suit any form of employment that they are looking to go into when they finish their studies.”
In the last six years NACUE has engaged over 180,000 students in entrepreneurial activities and supported a network of over 260 enterprise societies. Its community alone has generated over 1,600 innovative businesses and created hundreds of jobs.
Key to this success is NACUE’s annual Student Enterprise Conference – which, this year will be held 11-12 March at the University of Lincoln.
“Over the weekend more than 500 young people from the UK and Europe come to champion student enterprise,” explains Knower. “Young founders share their stories, interactive workshops explain the next logical step to formulating an idea, and burgeoning businesses help students develop their concepts. It really is an excellent opportunity for young people who are interested in start-ups or enterprise as a whole.
“We also make sure that our schedule is really broad because the number of students studying different courses within our network is huge. It’s important to provide diversity so students can tap into the areas that interest them.”
NACUE also run weekend workshops around how to design products that gives students the chance to sell their wares, made over a period of four to six weeks, to their local community, and also work with its sponsors to ensure that there are funding opportunities available to students throughout the year.
Another NACUE event that has helped generate many successful young businesses is the Varsity Pitch Competition held in partnership with multinational conglomerate Tata. The three-stage competition to win £10,000 of equity free start-up funding is open to any current students at a UK university or college or anyone who graduated after 2012. It includes an online public vote, a boot camp with an impressive line-up of mentors and a grand final with attendees from the media, with the final held during Global Entrepreneurship Week in November.
Meanwhile, in the West Midlands, the University of Wolverhampton has recently secured a £2.4m contract to continue delivery of its highly successful Innovative Product Support Service (IPSS) project.
Part-funded by the European Regional Development Fund the IPSS provides advice and support for development work carried out at the university’s Faculty of Science and Engineering on behalf of SMEs that are developing innovative products to launch on the market. It also works alongside Aston University with projects specialising in photonics and Birmingham City University that concentrates on 3D engineering.
“Eligibility is the first stage,” explains Mike Shields, IPSS project manager. “An advisor would spend two days assessing an SME project then look at ways it could be taken forward. If the proposition is viable, the SME gets another four days of free advice support.”
The IPSS concentrates on business ventures in the West Midlands, yet its vast number of support networks range from region-specific to all over the UK.
For example, its Help for Inventors scheme. For an online fee of £50, IPSS will meet with an inventor, sign a confidentially agreement, have a one-hour meeting with innovation experts at Wolverhampton Science Park and then come up with a recommendation as to the best course of action. For example, ‘Don't put any money into this, it’s best developed as a start-up business’ or ‘It’s a good idea and we would like to offer you a Development Partnership Agreement and work with you free – for a split of the products.’
“If we’re approached by a graduate start-up, we may recommend the Speed Programme,” says Shields. “This is a six-month business start-up project at the University of Wolverhampton, which aims to help create new businesses in the West Midlands region. It offers students and graduates from any subject area the opportunity to develop their idea into a business to run along their studies, after graduation or alongside employment in a supportive environment and may give access to grants of £1,500”.
“Alternatively, we’d also refer them to Virgin StartUp which funds loans up to £25K,’ continues Shields. “Also, as your average undergraduate/graduate is under the age of 31, we may suggest that they could look to The Princes Trust Enterprise. That provides business support and also has access to loan funding.”
IPSS also works alongside Get Set For Growth – a government and private business sector-funded organisation with teams based all over the UK.
In its first incarnation the IPSS project supported 200 beneficiaries. The current programme, which runs until 2019, is expecting to support around 230 beneficiaries in the Black Country alone.
Further resources for young entrepreneurs: