Gen Y Entrepreneurs Get New Opportunity

Last Updated Oct 26, 2011 2:57 PM EDT

Gen Y workers who find their job hunt stalling -- but their side business growing -- may have found a couple of things to like in Tuesday's White House announcement of new student loan rules.

Buried in the last paragraph was news that the Young Entrepreneur Council (YEC) would be launching Gen Y Capital Partners -- "the world's first early stage venture accelerator for generation Y, by generation Y." The project creates a new opportunity for 20-somethings looking for an entrepreneurial career path, with the privately funded investment firm investing $10 million in up to 100 startups over the next three to five years.

The program will offer participants three key advantages:
  • Relief from federal student loan debt for up to three years
  • Elimination of living expenses -- students will live on college campuses and have access to targeted educational opportunities -- for up to two years
  • Peer-to-peer mentoring by members of the YEC
Interested entrepreneurs (who can range from recent grads to age 35) can apply starting November 1 to be initial participants in the program, at genyfund.com. I spoke with Scott Gerber, YEC founder and author of Never Get a "Real" Job, about the new venture.

Why start Gen Y Capital Partners now? Gen Y Capital Partners was conceived on a simple principle: to remove as many barriers to entry from the start-up equation as possible and help young entrepreneurs access seed capital to take their businesses to the next level. We understand how to help this generation, because we are this generation.

But other than being Gen Y-led, how is this different from other start-up incentives? While many of the visible early-stage venture funds in the US invest solely in tech businesses, Gen Y Capital Partners will seek out the highly scalable, "tech-enabled" businesses in verticals and markets that are traditionally ignored or overlooked.

How is Gen Y Capital connected to President Obama's new "Pay As You Earn" initiative? Gen Y Capital will be the first early-stage investment company to utilize Income-Based Repayment as part of its business model. After [program participants] subscribe to IBR, the GYC will go a step further, paying the founder's federal student loan debt obligations for up to three years and enabling them to concentrate exclusively on their ventures during the crucial startup phase.

Where will entrepreneurs be living and taking classes? GYC has partnered with Cogswell College for an on-campus residence, and Georgetown and Princeton for relevant courses. We will be creating "Startup Villages" on these campuses and others.

Why is the peer-to-peer mentorship through the YEC so important? It's crucial. Being able to learn from the failures and successes of others offers a tremendous amount of value and insight that cannot be found in any textbook. Having a like-minded support group also provides entrepreneurs with a great sounding board to test, discuss and debate new ideas.

YEC members are the young thought leaders and founders behind some of the world's most successful companies and nonprofits, including LivingSocial, iContact, Grasshopper, Mint.com, Startup Weekend, Threadless, Reddit [and others].

Who are ideal candidates for the program? We are targeting people under the age of 35. We are [also] looking to work with entrepreneurs and businesses with the following characteristics:
  • A well-rounded management team with strong business knowledge, especially in the area of their company's product/service
  • A product/service and business model that is scalable
  • 1 or 2 paying clients
  • Barriers to entry for competitors
  • A clear exit strategy
Even if young entrepreneurs don't get into your program, do you have some tips for them? Be certain your idea is a money maker, not a money pit. Saying "you'll figure out how to generate income later" is irresponsible and foolish.

Know that nothing will ever go as planned -- ever. And don't get stuck in analysis paralysis. Stop writing about selling and go and sell! Learn what works, scrap what doesn't and improve your batting average as you go.

Have you turned a side gig into a full-fledged business? Please share your story in the comments section below.

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