With Scant Jobs, Grads Make Their Own

From the Wall Street Journal | Dec 22, 2009

By TODDI GUTNER

Andrew
Levine knew he wouldn't find a job in investment banking when he
graduated with an M.B.A. from the University of Miami in 2008. Wall
Street was in the midst of a financial collapse. So instead the
24-year-old focused his efforts on launching a start-up. "I figured
that starting my own company was the best use of my time while I waited
for the market to thaw," says Mr. Levine.

Jason Henry for the Wall Street Journal

Andrew Levine

Faced
with an unemployment rate of 16% for 20- to 24-year-olds, a growing
number of recent college and grad-school graduates are launching their
own companies, according to anecdotal evidence from colleges,
universities and entrepreneurship programs around the U.S.

For his part, Mr. Levine built upon a business plan for a niche
social-networking company he had created for an entrepreneurship class
the prior year. He showed the plan to the father of a college friend
who was an angel investor and got $40,000 in seed money in exchange for
an equity stake in the business.

Armed with start-up cash, Mr. Levine
created audimated.com, an online social-networking site for musicians
and their followers. It serves as a forum for the independent music
community-both fans and musicians-to discover and promote new music.
The site is in beta testing now with a launch expected in January.

This push toward entrepreneurship among
young people is likely to continue as employers plan to hire 7% fewer
graduates from the class of 2010 than they hired from the class of
2009, which saw a nearly 22% drop in hiring from the class before,
according to a recent report from National Association of Colleges and
Employers. The annual average percentage of all job seekers starting
their own businesses increased to 9% through the third quarter of 2009,
according to Challenger, Gray and Christmas, a global outplacement
consultancy. That's compared with 5% at the end of 2008.

Jason Henry for the Wall Street Journal

Mr. Levine's Web site

"Given
the state of the economy, and the state of the job market, many young
people are getting the push they needed to become entrepreneurs," says
Bo Fishback, vice president of entrepreneurship at the Kauffman
Foundation, a nonprofit organization that promotes entrepreneurs. "It's
a lot easier to decide to launch your own company when there aren't a
lot of jobs out there."

School career-service officials say it
makes sense for new grads to go the start-up route. Young adults are
often well-suited to put up with the long hours start-ups demand. They
don't have the responsibilities and financial obligations that burden
older adults. What's more, these graduates grew up on the latest
technology and easily adapt to technological improvements.

Of course, young entrepreneurs also
are likely to face their own hurdles. "Having the skill set to become
an entrepreneur is different than any thing you learn in school," says
Susan Amat, the executive director of the Launch Pad at the University
of Miami, an entrepreneurship-support program based out of the campus
career center.

To that end, it's important for young
entrepreneurs to seek the necessary help to get started. For current
students or recent graduates, it might be easiest to reach out for
assistance on campus. Many schools have campus incubators or offer
start-up competitions, like Babson College's annual Entrepreneurship
Forum, which offers cash, consulting, legal and Web services to winning
business plans. Other schools have business incubators that help
students-and sometimes outsiders-hone business ideas and, in some
cases, support them financially or with other resources.

Mr. Levine turned to the Launch Pad
before he sought out an investor to him sharpen his business plan and
investor presentation for Audimated.com. The program also gave him
guidance for creating a revenue strategy and trademarking the site's
logo.

A boot-camp training program or organized group for aspiring
business owners also can help. The Kauffman Foundation's FastTrac, a
10-week boot camp offered throughout the country, trains aspiring
entrepreneurs. And Y Combinator of Mountain View, Calif., and TechStars
in Boulder, Colo., offer cash and mentoring to young founders.

Many of these programs provide advice for newbie businesspeople-from
whether an idea can support a business, to how to write a business
plan, to understanding your market. They also provide an opportunity to
meet other entrepreneurs who are further along in the start-up process.

The biggest challenge, though, might
be convincing investors and customers that a young 20-something has the
experience needed to deliver on a plan. One way to clear that hurdle is
with strong advisers. "Recruit the right advisers who will vouch for
you, who are experts in your field, will let you use their name and are
beyond refute," says Mr. Fishback.

Experts in the business, entrepreneurs with a number of successful
ventures under their belts, and well-respected professionals can help
open doors for fledgling start-ups and lend an air of legitimacy and
trust.

Brooks Morgan, a 2009 graduate of University of Kansas, did just
that. Mr. Morgan wanted to work in venture capital, but jobs were
scarce, so he found work on the other side-at a start-up. As vice
president of business development for Infegy, a start-up enterprise
social-media analytics company, Mr. Morgan's first order of business
was to attract advisers. His last two years in college, he had worked
part-time with Richard Caruso, a venture capitalist and 2007 Ernst
& Young Entrepreneur of the Year award winner. Mr. Morgan tapped
Mr. Caruso, who introduced the three Infegy principals to people who
could help them land deals with corporations. Mr. Morgan also searched
online and found another adviser who became Infegy's chief financial
officer.

"Because we were passionate about what we were doing, [our advisers]
were excited to be with and help the younger generation," says Mr.
Morgan. Infegy was launched earlier this year and has 20 employees and
several Fortune 500 clients.