Located in Palo Alto, Stanford University has long been known to have deep ties to the surrounding culture of startup companies in Silicon Valley, but now the school is taking steps to foster its direct involvement. StartX is a student-created nonprofit that helps Stanford students develop their start-up ideas. Those accepted receive training, office space and mentoring, and the program also connects students with potential investors. Stanford University recently announced that they are forming a partnership with StartX to create the Stanford-StartX Fund to invest in these startups. Programs that provide resources for student entrepreneurs through funding opportunities are immeasurably helpful, but may lead to a conflict of interest between the school and its students.
While the university “will participate as a minority investor alongside other venture capital and angel investors,” it is Stanford’s first attempt to make money from entrepreneurs coming out of the university. The fund will support the operations of StartX, and what’s called the “entrepreneurial education program” which can essentially invest any amount of money in a company. However, Stanford also received criticism when it became public knowledge that some professors would invest in their own students’ companies, a clear conflict of interest.
The Stanford-StartX fund is particularly helpful due to the typically high barriers to entry in the ultra-competitive tech industry of Silicon Valley. StartX has helped to create a number of successful companies, including MedWhat, a search engine that allows users to ask questions regarding health or medical problems. If other universities invest in such programs, they should establish guidelines in order to ensure the academic and educational priorities. If a university-backed program encourages students to drop out to pursue a business opportunity it would be contradictory to the principles of an academic institution.
Stanford has garnered controversy regarding their focus on entrepreneurship due to a concern over whether these types of initiatives detract from education and create pressure on students who are not interested in startups. There are also ethical questions that come about when a university invests funds in companies founded by undergraduates. Conflicts of interest may arise when the university has a profit-making agenda over its students. Recent Stanford alumni have suggested that the intentions of these start-ups have shifted from solving world problems to founding companies for the prestige of owning a successful startup. Universities looking to fund student-led start-ups should carefully screen whether students are dedicated to having an impact.
Here at the University, student, faculty and administrators alike have been pushing for more entrepreneurial opportunities on campus. OptiMize is a program that offers funding to startups that combine entrepreneurship with social service, furthering the University’s principles while encouraging student initiative. Startup Academy by MPowered Entrepreneurship hosts a series of sessions on coding languages and starting a business taught by successful entrepreneurs or professors, while providing networking opportunities for everyone involved. While the increased emphasis on entrepreneurship is noteworthy here in Ann Arbor — even getting a shout-out in the White House’s blog — the University should take note from Stanford’s model. An increased access to responsible funding for student businesses is key to keeping students competitive in an already competitive field.