What I Did at VC Camp
In the spring of 2007, Michael Sullivan was trying to figure out how to add some mojo to his startup, Affine Systems. As a graduate student in applied mathematics at Harvard University, Sullivan had co-founded the company in the fall of 2006 with classmate Bobby Impollonia. Working out of their homes, the two computer whizzes had whipped up a software program to let media companies know if their copyrighted videos show up on the Internet. But like many engineers, they didn't know much about business, and they hadn't yet put together a business plan.
Then they heard about an unusual summer program that had just been started by Highland Capital Partners, a venture capital firm with offices in Boston and Silicon Valley. The program was designed as a sort of summer camp for entrepreneurs. Open to undergraduate and graduate students, it offered aspiring entrepreneurs a $7,500 stipend, free office space, and access to Highland's staff and outside contacts. Sullivan applied and got in. Last May, he and Impollonia started the 10-week program.
They ended up with a lot more than a résumé booster. Highland's partners helped Affine craft a business plan, land their first test customers, and hire two senior executives. Ultimately, last winter, Highland put venture money into Affine, one of two companies in the program to get funding. "They give you full access to their entire network," says the 27-year-old Sullivan. "I don't think there's anything else like it."
Participants with Potential
Venture capital firms have long had traditional internship programs, like those at law firms and investment banks. College kids spend the summer tagging along to meetings and listening to presentations. But VCs have never been comfortable giving students real responsibility for making investments.
Highland's summer camp, which started its second year with the arrival of 10 new students this month, is a practical compromise. VCs focus on their business and maintain control over investment decisions, but they get an injection of new ideas from bright youngsters—with no strings attached. Highland's program isn't unique. A handful of other venture firms run similar summer camps, including Lightspeed Venture Partners, which is offering 19 students office space, mentoring, and up to $15,000 in grant money to help them jump-start their business. "We are trying to connect with high-potential people," says Michael Gaiss, a senior vice-president at Highland who runs its program.
For this summer's camp, the firm received 140 applications from students at Stanford, Harvard, Northwestern, and other top schools before choosing four teams. In return for its efforts, Highland asks one thing: If the startup raises venture capital within 180 days from the end of the program, the firm gets an option to co-invest up to 50% of the total financing. Highland didn't launch the effort thinking it was going to fund a lot of companies, but last year it ended up financing two of the eight teams, including Affine.
For the budding entrepreneurs, the proposition is clear: Besides the free space and a modest stipend that covers the rent, Highland's participants get to work side by side with professional business builders. Highland's full-time staff is a stairwell away on the second floor, while the teams occupy a first-floor space with the feel of a grad school dorm room. To blow off steam, there's a putting green in one office and a basketball hoop in another. Every so often, the teams will kick back on a patio, drink some beers, and fire up the barbecue.
Team members get a dose of practical advice during weekly seminars. Top executives such as Staples (SPLS) founder Tom Stemberg talk about, say, negotiating a term sheet or taking a company public. The relationships established during these meetings are invaluable, say participants. "As a first-time entrepreneur, all of these folks gave us access to a very smart network of talented people," says Matt Lauzon, the 23-year-old CEO of Paragon Lake, an online jewelry merchant that took the program last year and also received funding from Highland. "Being able to tap into that really accelerated our ability to refine the business model."
The Highland program and other similar efforts reflect the growing status of the entrepreneur in American life. Inspired by the stories of the founders from Microsoft (MSFT), Google (GOOG), Netscape, and Facebook, young folks increasingly want to start up their own businesses, say educators, financiers, and students. "It's become fashionable. You can control your own destiny," says Leon Sandler, executive director of Massachusetts Institute of Technology's Deshpande Center for Technological Innovation.
Some of this year's class are on the cutting edge, trying to commercialize technologies from the nation's leading laboratories. Ann Dewitt, a PhD in chemical engineering who just finished her first year at Harvard Business School, teamed up with two researchers at the Harvard Medical School to form Leuko Bioscience, a biotechnology startup aimed at treating diseases of the immune system. Dewitt's goal is to tap Highland's expertise and network to finalize her business plan and create a scientific advisory board. She is particularly keen on working with Bob Higgins, a general partner at Highland who has invested in numerous biotech companies, such as PerSeptive Biosystems and Pervasis Therapeutics.
Other teams that already have business plans believe the Highland program can provide the fuel to boost their company to the next level. While finishing up an an MBA at MIT's Sloan School of Management, Will O'Brien cooked up an idea to start a Web site that sells men's clothing. O'Brien was inspired by social-media sites such as Yelp.com that are driven by consumer-generated reviews. He, too, wants to tap into the wisdom of the clothes-buying crowd. "The existing Internet experience is not so good," says O'Brien, 28.
So last fall, O'Brien wrote a business plan, which ended up reaching the semifinals of the MIT 100K Entrepreneurship Competition. When the spring came around, O'Brien applied to the Highland program. Since getting accepted, O'Brien has moved to California so he can work out of Highland's office in Menlo Park and tap into the Silicon Valley talent pool. By summer's end, O'Brien is hoping the Highland team will help him launch the beta version of the site, expand his engineering and marketing teams, and strike up relationships with brand-name merchants such as Banana Republic (GPS) and J Crew (JCG). "Highland has been through this process so many times," says O'Brien. "They will help us develop these relationships."
Other team members say one huge plus is that the Highland name adds instant credibility to their ventures. Alex Bain, a recent graduate of Harvard Business School who is launching FanZanimal, a sports-themed stuffed animal business, says his affiliation with the firm has already opened doors with toy designers. "Early on it's really difficult to get phone calls returned," says Bain. "It helps to be able to say we are working with Highland. People know we've been prescreened by professional investors."
Bain is also excited about tapping into the manufacturing and distribution expertise of Highland's team. He'll need it: Bain has ambitious goals, hoping to be on store shelves by the fall. That means he needs to finalize plans for manufacturing, fulfillment, and acquiring trademark licenses of various sports teams. "I know management but I don't know manufacturing," he says. "I can ask people who have that experience."
Not all of the Highland teams succeed, of course. That's the nature of the venture game. Last year, a few of the teams petered out. But at the very least, Bain says the Highland program gives them a fighting chance to build the Next Big Thing. "The money alone that they give is very helpful," says Bain. "And it's nice to have an office to go to. When I worked from home it was a little embarrassing when I held a conference call and the cat meowed in the background."