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Old Investors, Young Entrepreneurs

"Certainly young people have more opportunity to start important businesses than they did before, and actually I think that when you're in college it's a great time to start a business -- it turns out that people in college have meal plans and places to sleep. If those are given, you can throw yourself into the business," says Nick Seguin, manager of entrepreneurship at the Ewing Marion Kauffman Foundation, the largest organization in the world dedicated to fostering entrepreneurship. Seguin started a digital consulting firm when he was 19.

Yet to impress investors, Seguin says it's important that the young entrepreneur is familiar enough with the mechanics of their business, is able to talk proficiently about the industry they serve as well as what they have done in the past six months to accomplish their goals.

"If a young woman is building a global telecom company at 28, what makes them the domain expert here? It's a huge market opportunity, that's great, but what makes you the one that I should place a bet on?" Seguin says. "The real question is 'Have you validated your business with customers?' What does your cash flow look like? The next iPhone app would be really big, but I'd rather somebody talk about solving a problem."

Investors are not only looking for traction but social validation. "A lot of investors will meet [young entrepreneurs] and ask, 'Who else have you talked to? Who else in my network can say you are who you are?'" Seguin adds.

Gerber, of the Young Entrepreneur Council, is an entrepreneur himself. Most recently he started Gen Y Capital Partners, an early stage venture accelerator for Generation Y entrepreneurs. The new venture began taking applications Nov. 1.

"It's important for our company and other companies to look at the bigger problems of why young entrepreneurs don't become entrepreneurs -- there are too many barriers" such as access to capital, Gerber says. "Not to say that banks are lending to anybody, but older generations have collateral and credit history."

The venture company plans to invest on average $15,000 to $50,000 (in some cases as much as $250,000) into early stage ventures by young people across multiple industries.
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