College students are full of ideas. When you combine young minds, technology and cheap beer, you are bound to come up with a few ideas for the next great app or product.
When I started my first company in January of 2014, my partner Matt and I were sophomores at the University of Delaware. Together we pooled $1,600 in startup capital, formed our first LLC and launched our business.
Since then, our company has changed directions, we’ve attended a startup accelerator and we’ve even raised outside investor capital.
If you’re a college student with entrepreneurial ambitions, why wait? Here’s how to launch a startup from your dorm room.
Validate Your Ideas First
Like I mentioned above, college students are full of elevator pitches. To turn that idea into a business, the first step you need to take is validating your idea.
In short, you need to make sure your idea is valuable to your end customer or user — that your product or service is something people actually want.
Finding out if you have a good idea at the start will save you from a lot of headaches later on; imagine investing a ton of time and effort into a product no one wants! The value you’ll deliver is called your value proposition.
To confirm you have a good idea, you need to first create a hypothesis. For example, “People will buy healthy dog treats because they care about their dog’s health” or “People will pay more for healthy dog treats because pet health is an important issue.”
Why would someone want your product or service?
To test your hypothesis, do some customer discovery, a process of testing your hypotheses with real potential customers.
Find 100 people who would be in the market for your product and interview them for 10 to 15 minutes each. Ask them a series of questions to validate, or invalidate, your hypothesis.
Finding these people isn’t usually too difficult. In our case, we needed to talk with student loan borrowers. We went to a local college campus and asked students walking between classes if we could talk to them for a few minutes. Surprisingly, most people were willing to help once we explained what we were doing.
Don’t interview your family or close friends. You want unbiased feedback during customer discovery, and people close to you might be too excited about helping you to be objective.
We used a tool called Lean Launch Lab to track our interviews and test our hypotheses.
Be as Frugal as Possible
I’ve always considered myself a frugal person. When we started our first company, my partner and I were able to find $1,600 in capital to get our idea off the ground, using personal savings from our part-time jobs. After spending $100 to register our LLC, we had $1,500 left in our account.
Too often, I hear great ideas left undeveloped by students who think they don’t have enough capital to start a business. I can’t stand the “I don’t have enough money” or “it will cost too much” excuses.
Today, it is cheaper to start a company than ever before. The rapid advancement in ready-made online resources has made starting a business inexpensive; you can launch just about any tech-based business for less than $1,000.
Starting a company doesn’t have to be expensive. If you cut out the fat, I bet “it will cost too much” will no longer be an excuse. Do you need a live customer support on day one? Probably not, a simple contact form should do.
Being a frugal entrepreneur will help you focus on the key components needed to deliver your value proposition.
If you know where to look, you can also find a lot of free money to help you get your startup off the ground.
At the University of Delaware, we have a pretty well developed entrepreneurial program. My partner and I have never taken an entrepreneurial class in our life, but we knew that our college had an entrepreneurial program to provide funding to student-run startups.
After building our initial product, we received more than $5,000 of free money, as well as a host of other benefits such as a free office, utilities, coffee and Internet.
Starting a business in college doesn’t need to be expensive. Be frugal with your own resources and look to leverage your college’s resources. Don’t let “I don’t have enough money” be an excuse.
Apply to an Accelerator
The concept of a startup accelerator was pioneered by the now infamous Y Combinator. Accelerators invest a small amount of capital in a group of early-stage businesses. They help you quickly develop your product, do customer discovery, teach you entrepreneurial principles, and help you connect with influential people in your industry.
Startup accelerators can be great if you’ve already established a simple version of your product or business and are looking to take your company to the next level.
In most cases, startup accelerators are run by successful entrepreneurs looking to help new entrepreneurs. Giving back is a big idea in the entrepreneurial world.
Accelerators often provide about $20,000 for 6% of your company. Overnight you can turn your crazy idea into a business worth $333,333 on paper. Accelerators are usually funded by groups of private investors who want you to succeed, since they’ll earn returns on their investments.
We participated in the four-month-long Iowa Startup Accelerator in Cedar Rapids, Iowa. Applying while in college was a great idea. Accelerators love college students, and I learned more during the program than I ever did in school!
Market Yourself and Your Business
As your business progresses, you will likely look for ways to grow faster. Most entrepreneurs start by looking for additional capital to help accelerate growth.
Whether you want to work with an accelerator or an angel investor, you are your most important selling point. Accelerators and angel investors invest in the people in a business, more than the product. They want to see passion, founder chemistry and a solid resume.
A potential investor needs to know you won’t give up when the going gets tough. Having passion for your product and great partners will keep you going even through the worst days as an entrepreneur.
Start courting investors by building relationships through weekly newsletters, coffee dates and phone calls. You’re not going to get a check on the first meeting. Odds are, it will take months before a potential investor turns into an actual investor.
Launching a startup in college is an incredibly rewarding experience. You will learn a lot about your industry and yourself. Test your ideas, market yourself and your product, and use all the resources at your disposal… and you might end up with a profitable company.
Your Turn: Have you launched a startup as a college student? We’d love to hear about it!
Nate Matherson is the Co-Founder and CEO of LendEDU, a marketplace for student loans and student loan refinancing. Nate started LendEDU while he was a student at the University of Delaware. You can email Nate directly at firstname.lastname@example.org!