But Gerber says that young entrepreneurs have an even bigger problem that needs to be solved: how to unburden the group from the gigantic student loans that are inhibiting them from starting businesses.

The new fund combines income-based repayment options to pay the entrepreneur's federal student loan debt obligations for up to three years, enabling them to concentrate on the crucial start-up phase of a business. It will also offer some the opportunity to live on college campuses for us to two years as well as peer mentoring.

The company expects to invest in up to 100 start-ups over the next five years, and several hundred over the next 10 years.

"We hope to have long-term partnerships with these people," Gerber says.

"At the end of the day investors are investing in people -- that's obviously the case in all investments -- but specifically for young people if they really believe strongly in leadership at this age, they'll have a long career. You're putting a bet on these people," he adds.

-- Written by Laurie Kulikowski in New York.

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