Finding that first customer is a challenge for many entrepreneurs. But business owners who are still in college often have a leg up with an influential buyer they may not have considered: their schools. Seth Priebatsch, a Princeton University freshman with an idea for high-tech scavenger hunts played using mobile phones, approached orientation officials at the school in May 2008. Within a few weeks he had closed his first sale—a deal to license his mobile gaming software to Princeton for September's orientation activities. Priebatsch's company, SCVNGR, with 15 employees and nearly $1 million in revenue, now counts about 300 colleges and universities as clients.
Landing a big university as an early customer can give an unknown startup credibility. "Whatever you're thinking of charging your first couple of clients, it would be worth paying them double just to have them use it," says Priebatsch. He resisted giving his product away because he thought Princeton wouldn't take it seriously if he didn't charge appropriately for it, but he made sure to "bend over backwards to help and make sure it works."
There are more than 4,300 degree-granting institutions in the U.S., and together they spent $343 billion in 2006, according to federal education statistics. Colleges and universities tap thousands of vendors to provide the goods and services needed to run a campus, from technology to food service to landscaping. Student entrepreneurs have particular advantages selling into this market, since they already have a foot in the door at their own schools, but marketing to educational buyers has unique challenges as well.
PITCHES AND PROCUREMENT
Priebatsch's Princeton connection got him crucial face time with a potential client, and most student entrepreneurs can expect similar hearings from their own schools. But they still need to know the fundamentals, like what need they're meeting, how the college already fills that need, and who the competitors are, says Gerry Bogatz, president of MarketingWorks, a Doylestown (Pa.) consulting firm that focuses on marketing to educational buyers. "To walk in when you don't have all those bases covered is really asking for disaster," says Bogatz. Still, landing that first meeting can be a huge advantage for a student startup: "The sale is probably 50% done at that point," Priebatsch says.
But the other 50% is tough. Student entrepreneurs compete with entrenched vendors and need to establish their own credibility. And they should prepare to deal with bureaucracy, because the buying decision will rarely be up to one individual.
Most schools have procurement or purchasing departments that set guidelines on what types of vendors the schools may use and how buying decisions are made. "It's procurement's job to be stewards of the university's funds," says Doreen Murner, CEO of the National Association of Educational Procurement. Certain contracts must be awarded through competitive bidding, for example. Some services may already be provided under an existing contract, barring the school from buying from a new company. A good relationship with the school's purchasing department will help entrepreneurs navigate buying guidelines and identify opportunities across campus.
Colleges interested in sustainable practices are the perfect market for Logan Green and John Zimmer. Their two-year-old company, Zimride, helps students coordinate campus car pools and ride shares through a Web site and Facebook app. In 2007 they approached sustainability coordinators at their own schools—Zimmer at Cornell University and Green at the University of California at Santa Barbara—and offered the program on a pilot basis for free. The sustainability coordinator at Cornell then recommended Zimride to a group of other Ivy League schools. "The strategy was to pick visible, recognized schools for leadership in transportation," Zimmer says. The company now has 33 colleges as paying clients and projects revenue of $400,000 in 2009. And, no doubt, they're getting an education money can't buy.