Broad College Expands Entrepreneurial Focus
“The state is facing a time when economic development is crucial, when our industry structure is changing,” stated Zsuzsanna Fluck, associate professor in the department of finance at The Eli Broad College of Business at MSU. “The governor and the president of MSU have mentioned many times that entrepreneurships and start-up innovations will be critical for the turnaround of the Michigan economy.”
Fluck, along with Roger Calantone, Eli Broad chaired university professor of business and director of the Information Technology Management Program, are co-chairing the newly formed Institute for Entrepreneurship within the Broad School. The institute has already received a $2 million pledge from Robert K. Burgess, president of the Broad School’s alumni association board of directors and a member of the MSU Foundation’s board of directors.
“I saw an opportunity and I used the gift to provide the students with a [chance] to learn what entrepreneurialism is all about, and how to survive in the world of venture capital and private equity,” Burgess explained. “I think Michigan is lacking in new ventures and entrepreneurial start-ups, and I think it’s something Michigan is going to have a role in, if it’s going to achieve an economic turnaround.”
“Start-up enterprises can turn into more established enterprises that can employ a lot of people and provide tax revenue and prosperity for Michigan, and this initiative is in line with those goals,” added Fluck.
The institute already has an entrepreneurial specialization for graduate students, with an undergraduate program expected in the 2007-2008 academic year. Students train in real-world situations with the university’s own innovators.
“The MSU Foundation is working on a lot of commercialization of intellectual capital within the university faculty,” said Robert Duncan, dean of the Broad College of Business. “Part of what a university does is to take ideas that have potential and see if they can be taken to the marketplace. There are a lot of opportunities as you go across the medical schools, the engineering school, agriculture, and looking at something like biomass. This is where you pair up the school’s faculty and students with the scientists who have an idea and are trying to commercialize that.”
“We help them to develop business plans and ideas in a form that will attract outside financing,” added Fluck. “Many great ideas have failed because they simply could not raise financing, they are not able to structure the business right, or they might have entered into financial contracts that actually brought down the whole business.”
MSU’s institute has two separate centers to deal with these issues: the Center for Entrepreneurial Strategy and the Center for Venture Capital, Private Equity and Entrepreneurial Finance.
“The [Center for Entrepreneurial Strategy] is looking at start-up organizations and what the key issues are so they can go to the market with a good product, which makes them successful and develops into an ongoing organization,” Duncan said of the center run by Calantone. “The Internet bubble in the 1990s was an example of people having ideas and going through a start-up phase, but then they failed. What the Center for Entrepreneurial Strategy will do is work with people on campus, helping them to see what the market viability is and work with them through the start-up phase. We really think this can be an important part in economic development.”
“The Center for Venture Capital, Private Equity and Entrepreneurial Finance looks at the finance side of entrepreneurship,” explained Fluck, who is in charge of this center. “[It] will focus on three elements: venture capital, which is financing very young enterprises, which comes from venture capital companies; private equity, which focuses on more mid-sized companies or an exit route for small entrepreneurial companies when they actually grow enough for an initial public offering or buyouts, and those who facilitate those buyouts are the private equity companies; and we focus on helping the entrepreneur directly in thinking about the financial needs of the business and what are the means to meet these financial needs. Many universities teach entrepreneurship, but they don’t teach this type of course where you combine entrepreneurship with the financial side. The [students] can communicate with venture capitalists, regulators, and lawyers.”
“When the students go to an individual venture capital company or work for a larger company that does venture capital, they’ll have this experience,” added G. Geoffrey Booth, chairperson for finance. “If you think of venture capital as these small companies, well, [it] is also done by large companies. Innovation takes many, many forms. It doesn’t have to be small. It doesn’t have to be a start-up. GM would like to have innovators at this particular time.”
“We are involved in a project where our students are actually helping Delphi to develop new ventures, which is, again, innovation that is probably going to be spun off from the larger company, but the innovation starts in-house,” Fluck stated.
“A lot of these large companies are outsourcing innovation, rather than having a huge [research and development] team in their own company,” added Booth. “They go out and find the R & D from small companies, and our students can very neatly fit into this. We look at this as a long-run process of supplying the industry with people like this.”
In addition to the educational components, the institute also encompasses research and outreach. The research will look at the needs of Michigan’s economy and how to promote venture capital and private equity in the state, and, as part of the outreach, institute staff will share their findings and get input from a number of sources.
“We will disseminate this academic and applied research and core knowledge to the whole community, which includes the university, our alumni, the state Legislature, the Michigan Economic Development Corporation, and the local business community,” said Fluck.
That the institute will involve so many different colleges within MSU is in itself an innovation.
“Universities are typically organized by functional departments,” stated Booth. “This is really cross-disciplinary. The institute will have people from different disciplines, such as supply chain, marketing, management, and finance. We saw clearly that people from other disciplines could belong to it. It’s such an easily definable area of entrepreneurship that we felt it deserved its own niche. But it will be a specialization, rather than a major, in that you typically cross disciplines.”
“We think giving our students these skills will give them an additional tool, so they will be much more successful when they graduate,” said Duncan. “The new curriculum will better prepare our students to work with start-up efforts. This is going to provide some real opportunities outside the classroom.”
This enterprise will also benefit MSU as it becomes more self-sustainable.
“More than half our funding comes from places other than the state,” Booth commented. “As a university, we need to be able to generate funds so we don’t have to rely on increasing tuition.”
“States thrive economically because of the intellectual capital in that state,” Duncan noted. “That is a very important factor. Economic development is significantly driven by intellectual capital, which is significantly driven by universities, and Michigan has a great set of universities.”
Center for Venture Capital, Private Equity and Entrepreneurial Finance (CVCPE)
Zsuzsanna Fluck, Director
319 Eppley Center
Eli Broad College of Business
Michigan State University
Center for Entrepreneurial Strategy
Roger Calantone, Dir
Eli Broad Collegeector
307 N. Business Complex of Business
Michigan State University