How can students get funding for entrepreneurship projects?
Students have been using the crowdfunding model for a while now, and many of them have made it their life’s work to get a startup off the ground.
But a recent study found that while many students were willing to take on more risk in order to fund their projects, most didn’t know how to do so.
The new study by the Carnegie Mellon Center for Entrepreneurship and Research, conducted with the Center for Students in Entrepreneurships and Students in Technology, found that the average student who takes on entrepreneurship projects has no idea how to actually fund a project.
And they were more likely to be unaware that a student organization could raise money through their student project than a traditional scholarship or grant.
“Students who do not know how student-led fundraising works, and they are also the ones who are making the biggest mistakes, are the ones that will be left behind,” said lead author Andrea McGehee, a professor in the Carnegie Graduate School of Business.
“That’s why we’re trying to figure out how to better serve students with these projects.”
The study, titled “A Case Study of the Use of Student-Led Fundraising for Entrepreneurial Projects,” also found that students who were not aware of the crowdfunding models offered by their school, such as the student organization Fundraising by Design, were less likely to consider the opportunity to contribute to their projects.
Instead, students who knew about the student project model were more inclined to consider funding their projects and more likely than their peers to fund them through their school.
The study also found students were more willing to participate in a project when they knew about a student-based project, rather than a broader community effort.
The authors also found a significant difference in the types of students who participated in student-driven projects versus projects organized by outside organizations, such that the types who participated more often were students who could not afford the tuition and the types whose parents could not help them afford it.
“This study is a first step in helping students understand the risks associated with student-lead fundraising,” said McGehees, who was also a lead author of a recent paper that examined crowdfunding as a method for supporting young people in STEM fields.
“We want to help students who are interested in pursuing entrepreneurship understand the challenges of launching and raising funds.”
The researchers also surveyed more than 3,000 students and found that nearly a quarter of them believed that student-backed projects were an efficient way to fund student-funded projects.
While some students said they were willing and able to fund a student project through their institution, the majority were unsure how to proceed with a student group’s project, said McGluees.
“What we found is that students are not aware that there are options,” she said.
“They may not know if they can find a student who can help them fund a scholarship or a grant, or if they have access to funds to pay for a professional service like a design firm or a legal service.”
The students who did know how crowdfunding worked said that students would be more likely if they had a mentor or mentor-in-residence who could help them raise funds.
“If a student is going to go through the process of going to a group and getting a student’s name, then it’s going to take a lot of work,” said student organizer and co-author Rachel Gifford, who works with the New York-based Entrepreneurs for a Better Future, a group that supports students in the field.
“It’s going, it’s gonna be a lot more difficult, it really is.
It’s not an easy process.”
But the most common mistake students make when they start a student team is not understanding the process or being too involved in the process.
“There are a lot, many times, there’s a lack of transparency and accountability in how this is going on,” said Giffords.
“And students don’t get to decide if they want to fund this, they don’t know if it’s a project that’s going on and they don, they just don’t.”
The Carnegie Mellon study also examined how students perceived and responded to the funding opportunity offered by an individual student organization.
The students said that they did not understand how the funds were being used.
“When we were told that they were funding a project through a student program, the students thought, ‘Oh, that’s good, that means we’re getting something out of this,'” McGlhees said.
For students who had heard about student-generated fundraising, the answer to this question was “no.”
“Students are so used to this being something that they’re doing on their own and that they know how it works,” Giffds said.
But for the students who didn’t understand how student fundraising works and didn’t feel like they were getting something for their efforts, the results were the opposite.
“The students were the most likely to say that the money was going to be going to the organization,” G