Business Incubator Series: Art Boni, Donald H. Jones Center For Entrepreneurship, Carnegie Mellon University — Pittsburgh, Pennsylvania (Part 4)

By guest authors Irina Patterson and Praveen Karoshi

Irina: What sources do you use for angel financing?

Art: We have a few fairly robust angel networks here. We have a couple of organized groups that are in effect almost the equivalent of an early-stage seed fund. One of them is called Smithfield Trust Company and another is called BlueTree Allied Angels.

Basically, they invest their funds collectively as one investment unit. Usually, they form an LLC [limited liability company], put their money in it, and then put the money in the company. That is the one way to do it.

The second way is there is a very early stage equity fund in Pittsburgh called Pittsburgh Equity Partners [PEP], which is also a managed venture fund but again, for very early stage companies. So, there you have an organized group with a managing partner who makes the investment decision, but the money comes from angel investors through the fund, and they have a pro-rata share of profits and the right to coinvest side by side with the fund.

Irina: What else do you have to support your entrepreneurs?

Art: The team we have in place, our faculty, whether they are full-time faculty or adjunct faculty, are all experienced entrepreneurs, including me.

We also use an extensive network of people in Pittsburgh and around the country who have domain expertise. These people are not paid for what they do. They like working with entrepreneurs and volunteer their time and services to do so. Some of those could get engaged with the company directly, and that happens from time to time. Then they could play a more significant role than mentoring; it could be a board role or an advisory role.

One of the things we are talking about doing is building an entrepreneur-in-residence component through this, where there will be more heavy engagement, and there will be some form of compensation at that level, but we don’t have that in place yet.

For example, an entrepreneur-in-residence may come in and work with all four to five of these companies, whereas an individual mentor will probably work with one of them.

Irina: Do you use any special curriculum?

Art: Yes, we do. There are about seven courses in our curriculum. They go all the way from how entrepreneurs come up with ideas, how they screen them, how they qualify them, how they develop them, how they build their teams, how they raise money, the whole gamut. We offer this curriculum, as I said at the beginning, to students in the business school as well as students in other parts of the campus.

Irina: What are your metrics for success?

Art: What we are trying to accomplish is to produce entrepreneurial leaders who bring innovative products and services to the marketplace. One measure of success is how many students we have who end up either starting up companies or working in early-stage companies and bringing new products and services to the market.

Other metrics would be the number of companies we launch each year, how much money they raise, and how many products they launch. So, the idea here is to create value that is delivered to the marketplace in terms of innovative products and services.

Irina: Would you give us some numbers on how many students you touch?

Art: Well, you have to look at that on different levels. For example, our MBA program has approximately 225 students in each year’s class and there are two classes; it is a two-year program. Out of the 225 students, approximately 45% take at least one course on entrepreneurship. So, that would be 40% of 225, which is roughly 80 students. That is sort of the bottom of the pyramid, if you will.

The next level is students who concentrate on entrepreneurship, which means they take three courses. That number is smaller; it is probably closer to 20%.

At the highest level, we have an entrepreneurship track in the program, which I believe includes seven courses, including a capstone project course that can be either a student’s own startup company that he or she is working on or a sponsored project from an outside organization. On that list we have approximately 20 to 25 students per year, or about about 10% of a class.

They graduate with an MBA, and those who complete the track get a certificate that they participated and completed the entrepreneurship track with all its courses and requirements.

This segment is part 4 in the series : Business Incubator Series: Art Boni, Donald H. Jones Center For Entrepreneurship, Carnegie Mellon University -- Pittsburgh, Pennsylvania
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