Hard knocks are just a part of life for the average startup. But alums William Harper and Christian Allen are behind a group that is working with Terry Entrepreneurship Program Director Chris Hanks to give students a shot at a sweetheart of a deal. That opportunity is a $100,000 equity investment from their venture capital firm GIB to the winning business plan in the university-wide contest called Next Top Entrepreneur.
This year’s NTE winner is the brother-sister team of Wes and Katie VanDyk for RushΣase.com, a venture that provides a streamlined, online recruitment process for the Greek system. The VanDyks’ business plan presented to the eight panelists from GIB in Sanford Hall on April 29, bested four other finalists and earned them the opportunity to negotiate terms for the equity investment.
“This isn’t a maybe situation; the investors are ready to invest in the winning project. The winners just have to negotiate a percentage of ownership that the equity investors will have,” says Hanks, who explains that the percentage is small and has no impact on the majority owner’s decision-making. In fact, if the business folds, there is no debt owed to the investors. “This is what we call friendly money. If it were too onerous of terms and conditions then it takes away the entrepreneur's incentive. They get that.”
VanDyk, a junior management major and Spanish minor from Dallas, Texas and a tailback for the Georgia Bulldogs, came up with the idea for RushΣase.com with his sister after visiting her at the University of Texas.
“She was the chair and recruitment rush captain and when I walked into her room and saw a multitude of physical information – literally packets four-feet high all around her room – we thought there has to be a better way to organize this information. Why not digitize it,” says VanDyk, who knew there was a niche for what they were trying to do, but the actual size of the market was far greater than they initially thought. He says creating a startup was a great learning experience. “It has opened my eyes to a whole other realm of financials and projections and what it takes to start a business.”
It was that degree of detail and credibility in the financial projections, along with the scalability of RushΣase.com that Allen says put the VanDyk team over the top.
“It’s not just a craft business, it can break through and be something really substantial, so that excites us.”
“I got so excited about it because I wished there was something like this when I was there,” says Harper, who along with Allen contacted Hanks to get GIB involved with the event. Harper explains that in addition to providing investment funding, the opportunity to mentor students through the entire six-month process of NTE is something he and Allen value. “This is the kind of thing that we wanted to do and we felt it was a perfect opportunity for our relatively new group and Chris’ relatively new event to grow together.”
After offering a $50,000 equity investment for the 2010 NTE, GIB upped the ante in 2011 to $100,000. Allen explains that Hanks’ knowledge and experience is a substantial reason for their desire to give back.
“Chris is superb at encouraging people to do practical things and not wait for the biggest idea that will turn into a Fortune 500 company,” says Allen, who values that Hanks has the perspective not to tell someone that an idea won’t work.
Hanks says that the way Allen and Harper are giving back is very unusual.
“These aren’t angel investors looking at pure profit motive. Most angel investors or venture capitalists are underwriting a business with the intent to make 10 times what they invested,” Hanks says. “It’s very friendly and incredibly meaningful.“