SSE Ventures rebranded as SSE Labs, takes no equity

April 22, 2010, 1:03 a.m.

SSE Ventures, a summer venture capital (VC) program started by Stanford Student Enterprises (SSE) in 2008, has become SSE Labs after rebranding and structural changes to the program.

SSE Labs, in a vein similar to SSE Ventures, will offer entrepreneurial students and groups with financial support for product and business development.

The move marks a shift, however, in the underlying model for the program. Ventures had previously relied upon offering seed money for business ideas and proposals as an investment, but managers felt that the group was not functioning effectively or gathering enough interest from talented student entrepreneurs.

“[SSE Ventures’] model was not as successful as SSE was hoping for,” said Cameron Teitelman ’10, the managing director of Labs and current general manager of the VC division of SSE Ventures.          Teitelman said that because SSE was unable to offer competitive sums of money to groups, they lost the best ideas to other VC firms and received “lower-quality ideas and applications.”

In contrast, SSE Labs is hoping to entice teams of Stanford students by providing support and resources without asking for a cut of eventual profits, as most outside VC firms would. The focus will be on allowing groups to devote an entire summer to developing their ideas in an educational environment, with access to advising and mentorship.

“The big differentiation is that we’re not taking equity,” Teitelman said, referring to the shift away from investing.

Groups who are selected to receive assistance will be set up with office space, funds for housing and living expenses and mentorship opportunities with entrepreneurial experts and guest speakers.

Although SSE Labs originally sought University approval through the Office of Development, the venture ended up under the purview of Student Activities and Leadership (SAL). SAL officially approved Labs this month. The program now awaits confirmation from the Office of Development to accept outside funding.

“What’s interesting about Labs is that there is no real profit associated with it<\p>–<\p>there isn’t any sort of real way to make money off it,” said Matt McLaughlin ’08, the ASSU financial manager and CEO of SSE. “It was envisioned as being an interesting education initiative that would essentially provide something that wasn’t provided on campus, sort of a summer opportunity.”

At this point, SSE has authorized $15,000 to go into SSE Labs, and the program is hoping to match these funds from an outside donor for a pilot program this summer. In the future, Labs hopes to grow to a much higher funding level from outside donors, “maybe upwards of $100,000,” McLaughlin said.

McLaughlin added that the program received “a significant amount of pushback” from the Graduate School of Business (GSB).

“[The GSB] has a different vision for what they want their students to do,” McLaughlin said. “I think they’re very active about wanting their students to go out of the Stanford environment for the summer.”

Overhead for the program in the future would be mostly the cost of salaries for the students who run the program, McLaughlin said. He added that Labs would consider hiring four students during the school year and one or two during the summer.

According to Teitelman, the program is expecting to support 10 to 15 student entrepreneurs this summer. Teams can be anywhere between one and five people, with two or three people as the target group size. Eventually, Teitelman said, Labs envisions moving up to 25 people, but that would only come when the program has become self-sustainable.

Applications for the program are being accepted on a rolling basis, with a final deadline of May 7, according to the Labs website.

Eric Messinger and Elizabeth Titus contributed to this report.

Ellen Huet is currently a senior staff writer at The Daily; she joined the staff in fall 2008 and served one volume as managing news editor in fall and early winter of 2010-2011. Reach her at ehuet at stanford dot edu. Fan mail and sternly worded complaints are equally welcome.

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