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Start-up finances: Student entrepreneurs tap their networks

Start-up finances: Student entrepreneurs tap their networks

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03/16/2013

 
BUSINESSEDUCATION
OnlineLearning
FINANCIAL TIMES
SPECIAL REPORT
|
Monday March 12 2012
Inside this issue
Devices
Moststudentsneed towrite toretaininformation.
ChrisNuttall
looks at moves tohelp them
Page 2Case Study:Royal Holloway 
The UK school is keen toattract students from theremotest areas, says
Emmanuelle Smith
Page 2Differentiation
Schoolsare trying to make theirweb-based courses as‘richas possible, says
Adam Palin
Page 2Start-up finances
Alanna Petroff
on the usesand limits of ‘crowdfunding’
Page 3Educationfor free
Wai KwenChan
considersvariousteachingmodelsand howprovidersfund them
Page 4Analysis
Adam Palin
examines the FT listing anddraws out trends
Page 4Hopes and fears
of BrigidaScholten, who will completeher final year of theAthabascaOnlineExecutiveMBA
Page 6On FT.com
Carina Paine
Schofield and
MarkThompson
look at changesbusiness schools face asnew technology becomesembedded in our lives
Schools struggle to stand out in a crowded market 
E
arly in 2011 Waitrose,the upmarket UKsupermarket chain, rec-ognised it could use thelatest technology to impart busi-ness school knowhow to itscashiers and shelf-stackers, aswell as to its managers andboard members.So the supermarket, part of the John Lewis retail partner-ship, worked with two UK busi-ness schools to launch its Part-nerLearn website in July, giving access to all 48,000 of its part-ners (its permanent staff mem-bers).Waitrose’s adoption of e-learn-ing, in collaboration withAshridge Business School andthe Open University, is oneexample of how the internet candemocratise learning, bringing business school programmes,once the prerogative of com-pany executives and aspiring investment bankers, to everyoneworking in a business.From degrees to seminars andtext books to research publica-tions, the past year has seen sig-nificant changes in the waysmanagers learn about their jobsand professors disseminate theirknowledge.There has been an explosionin the numbers and types of organisations offering courses,says Tony Sheehan, Learning Services Director at Ashridge.“The competition over thepast year has come from everyangle,” he says, including pub-lishing companies and “opencourseware providers”, whichprovide materials free of charge.But as well as the growth infree online management pro-grammes, the past year has alsoseen the launch of some of themost expensive.In July 2011, the Kenan-Fla-gler Business School of the Uni-versity of North Carolinalaunched its MBA@UNC, withfees of $89,000.At the top end of the market,quality not cost is the key con-cept, and Kenan-Flagler requiresall students to meet the sameentry criteria as for its full-timeMBA, which includes sitting theGMAT, the Graduate Manage-ment Admission Test.Kelley Direct, the online armof the Kelley School of Businessat the University of Indiana,also requires its participants tosit the GMAT.Munirpallam Venkatarama-nan, associate dean for aca-demic programmes at Kelley,says this reassures applicantsthat participants on similar pro-grammes will be of a similarquality. “We signal to our stu-dents that they are gointhrough a rigorous academicexperience, ” he says.Prof Venkataramanan saysthere is still some scepticismabout online education, but thatis changing.“In the US, we are seeing com-panies comfortable with onlinedegrees from the traditionalbricks-and-mortar-institutions.”Nonetheless, establishing thatyour high-quality programme isthe one to choose in a marketawash with low-cost alterna-tives is proving a hard sell formany business schools.In particular, it is often diffi-cult for prospective students todifferentiate between the pleth-ora of programmes, saysRebecca Taylor, newlyappointed dean of the Open Uni-versity Business School in theUK.“Our real challenge is to makesure that people know why weare different. Getting qualityout there is absolutely critical, ”she says.While the past two years haveseen interest focus squarely onthe devices that students use toaccess coursework – be that anebook or a tablet – the emphasisis now shifting to how datamanagement software can beused to give each student amore “personal” service.Such software can help ana-lyse where students’ strengthslie and where they need extrahelp, and can target materialaccording to an individual’spreferred learning style, saysRobert Goodwin, interim deanof the Graduate School at Uni-versity of Maryland UniversityCollege.
 Numbers and types of organisations offering courses have shot upin the past year.
Della Bradshaw 
asks why 
Continued on Page 5
“I think what you are going tosee is education targeted at indi-vidual students. We’re right onthe cusp of that,” he says.Cost is frequently not an
‘Our real challenge isto make sure thatpeople know why weare different. Gettingquality out there isabsolutely critical’
Online
Michellana Jesterfrom MIT SloanSchool ofManagementtalks aboutactionlearning
 www.ft.com/businesseducation | twitter.com/ftbuseducation
 
2
FINANCIALTIMES
MONDAY MARCH122012
those who might not knowfor certain that they willstay put for two years.But online study is notfor everyone, warns MrO’Brien, who says it“requires a lot of self-motivation”.Furthermore, the designof the University of London/Royal Hollowaycourse is deliberatelypared-down, with no bellsand whistles, or“gimmicky” uses of technology.“We’re quite aconservative, traditional
Business Education: Online Learning
Established businessschools have been reluctantto launch online degrees,often because of a perceivedlack of quality.But with an increasinglytech-savvy MBA population,and huge advances in peda-gogical technology, anumber of schools withhighly ranked traditionalMBA degrees are now seek-ing to create a presence inthis growing market.Spain’s IE Businessschool in Madrid, rankedeighth in the world for itsfull-time programme in the2012 FT Global MBA rank-ings, and the University of North Carolina’s Kenan-Flagler Business School, inthe US, where the full-timeMBA is ranked 56, areamong those that haverecently taken the plunge.At the core of their differ-ent approaches is a sharedemphasis on ensuring con-sistency of quality with full-time, campus-based pro-grammes.At Warwick BusinessSchool in the UK, distancestudents follow the samecurriculum as the full-timeprogramme, which isranked 27 globally.No distinction is made atgraduation between studymodes.Nigel Piercy, associatedean for the Warwick MBA,says: “With the same con-tent and standards, distancelearning is simply a varia-tion in delivery mechanism,not a different degree.”At Kenan-Flagler, appli-cants for its MBA@UNCprogramme have to sit theGMAT entry test just liketheir full-time counterparts.They also pay comparablefees of $89,000.Warwick’s approach isone of “blended” learning,with certain modules takenon campus. Students canchoose more face-to-facesessions, and amend theirstudy mode in line withtheir circumstances.“The increased volatilityof today’s careers demandsflexibility in programmes,”says Prof Piercy.Marwa Bouka is onealumnus who combinedperiods of full-time campus-based and distance learning to study over two yearswithout leaving her job.“The full time experience,though short, was incompa-rable, and it gave me aboost to continue the pro-gramme at distance.”While studying awayfrom Warwick, students areconnected to their MBAcommunity by ‘wbsLive’ – avirtual classroom wherestudents interact in semi-nar conditions – and by syn-dicate groups of 10 for com-pleting joint coursework.Bringing together individ-uals across time zones isproblematic, but collabora-tion in these syndicates isseen as increasingly rele-vant in a globalised work-place.“Virtual communicationis an opportunity to developand enhance one’s ability toorganise thoughts anddebate effectively – and thisis another learning proc-ess,” says Ms Bouka.Marcel Cohen, director of the Distance Learning MBAat Imperial College London,also advocates group workamong students of diversebackgrounds and locations.Spending only threeweeks together on campusover the duration of theirprogramme, students mustadapt to long-distance net-working, “the networking of the future”, says MrCohen.Now in its 10th year,Imperial’s Distance Learn-ing MBA is taught entirelyonline, and has differentcontent from the full-timeprogramme.However, each module iswritten by faculty memberswho teach on Imperial’sMBA and Executive MBAprogrammes, and is scruti-nised by a committee thatensures consistency andstandards across theschool’s “suite” of MBAs.Each module is co-ordinated via its own“Blackboard”, which func-tions as a forum for studymaterial and discussionbetween students and fac-ulty. “We try to leave dis-cussions alone for a coupleof days to allow peer-to-peerdebate to develop beforeintervening,” says MrCohen.Professors can track whois following debates, as wellas contributing to them, tomonitor student engage-ment.Across the Atlantic,Kenan-Flagler hasembraced cutting edge tech-nology in delivering itsMBA@UNC programme,launched in 2011. On top of “asynchronous” studymaterials that students canwatch on demand, includ-ing lectures, videos andinterviews, there areweekly “synchronous” sem-inars.Attendance – logging intothe virtual classroom at thescheduled hour – is manda-tory. Upon “dialling in”,each student’s face appearsonscreen via webcam.“Everyone is in the frontrow,” says UNC professorDoug Shackleford.Students also have one-on-one access to their pro-fessors in online officehours, and can keep trackof content “pinned” to eachmodule’s virtual wall.“While there are advan-tages being at the forefrontof innovations, we are going to be constantly evolving,”says Prof Shackleford.An iPad-compatible studyplatform is scheduled forlate 2012 and the textbooksthat were sent out to thefirst cohorts are to bereplaced by ebooks. “Thereare fewer limits to the tech-nology than you mightthink,says Susan Cates,executive director of theMBA@UNC.The programme’s“immersion component” – face-to-face courses at loca-tions around the world, is arecognition of some of thetechnology’s limitations.Students are required toattend at least two “immer-sions”, with sessions includ-ing persuasion, influenceand performance underpressure: “experiential”learning that is difficult toreplicate online.
Big namesdecide to join the fray 
Differentiation
Schools are trying  to make their web- based courses as‘rich’ as possible,says
Adam Palin
Whether they studyremotely or on RoyalHolloway’s leafy campus inSurrey, students on the UKcollege’s MBAInternational Managementprogrammes receive thesame University of Londondegree.Their experiences inachieving their degree varywidely, however.For a start, the vastmajority of those opting tostudy remotely are in full-time employment, whiletheir peers on the “home”course take time out of their careers to studyintensively.The differences do notend there. Though theactual syllabuses are“remarkably similar”,according to JustinO’Brien, MBA director atRoyal Holloway’s School of Management, the onlinelearning MBA and MScdegrees are significantlymore flexible – in theirdelivery, of course – butalso in the range of electives.After all, if you arelearning in your own time,you do not need to thinkabout whether optionsclash with each other onthe timetable.There are also moreexams on the distancelearning course – sincepresentations and groupwork are for the most partruled out.However, participantsalso attend two week-long plenary sessions (120 hoursin total), allowing them tonetwork with fellowstudents and benefit fromsome “face time” withprofessors and visitors.“The most interesting part for me, was thesessions in London,” saysSimarjit Chhabra, whoworks and lives inAustralia and is in histhird and final year of theMBA.“It provided a platformto meet professionals of different ethnic andcultural backgrounds frommore than 50 countries,he says.The ability to completethe programme fromwherever they happen tobe and in their own time isa big draw for students.Albert HetheringtonJones, a businessdevelopment manager at atranslation company inRome, says: “The mainattraction of the coursewas that it was flexibleenough to fit around mylife. I am based in Rome,but [right now] I am inCopenhagen Airport after ameeting in Sweden. Iconstantly travel betweenseveral countries and I amunable to study fixed in asingle place.” He is aboutto complete his MScInternational Management.Mr O’Brien agrees: “Theability to work flexiblysuits people with crazylifestyles. They don’t haveto be sat at a computerwith a headset at aparticular time,” he says.Indeed, unlike someother online courses,students complete thework in their own time – there are no “live” lecturesor workshops.Each of the ninecompulsory modules andfour electives takes sixmonths to complete, andseveral can be donesimultaneously – the MBAcan be taken over amaximum of five years,although, in theory, it canbe finished in little morethan two.“It suits people withfamilies or who travel alot,” explains Mr O’Brien.Mr Hetherington Jones“would recommend [thecourse] to anybody whocannot put their life onhold to study, and whodoesn’t know what theywill be doing or wherethey will be in the shortterm”.Postgraduate study issuch a big financialinvestment that distancelearning makes sense for
Low-tech design aims to broaden reach
Case Study 
Royal Holloway 
 The UK school is keen to attract students from theremotest areas, says
Emmanuelle Smith
‘The ability to workflexibly suits peoplewith crazy lifestyles– they don’t haveto sit at a computerat a particular time’
 T
wo years afterSteve Jobs held upthe first iPad at itslaunch in San Fran-cisco, Apple staged anotherevent in January at theGuggenheim Museum inNew York.The company that hadsingle-handedly created atablet market was now pro-posing to expand in the edu-cation sector by using theiPad for online textbooks.Apple is not the first tofocus on this area, but withthe 100m iPad sales mile-stone expected to be passedthis year and the company’smagical ability to enthuseconsumers with its vision,tablets and their softwarecould have a significantimpact on online learning.“As students are being introduced to iPads, someremarkable things are hap-pening; we’re on the cusp of something really great,”Phil Schiller, head of world-wide marketing, with typi-cal Apple bravado, said atthe event.The announcement at theGuggenheim was all aboutsoftware and services:iBooks 2, offering interac-tive textbooks at less than$15, iBooks Author anapplication to create them – and an iTunes U app,expanding the podcast lec-tures that universities offerthrough Apple, into fullonline course materials.The medium for all of thismaterial was the touch-enabled iPad, rather than aMacBook laptop or aniPhone. Some 1.5m iPadsare already in use in educa-tional institutions.Brent Tworetzky is prod-uct lead on the eTextbookReader, a cloud service thatenables access to digitaltextbooks on any device,which has been created byChegg.com, the textbookrental service. He says: “Wefind that when students arereading on tablets ratherthan on a PC, they consumemore pages in a session.They seem to be sitting down and focusing morewith a tablet.”Josh Koppel, chief crea-tive officer of ScrollMotion,a developer of etextbooks,agrees. He says: “Touchchanges the intimacy of theexperience. When youtouch the content, it reso-nates psychologically in adifferent way from whenyou’re just reading it. Itchanges the way youengage.”But tablets are still in theminority among electronictools used by students.Osman Rashid, a co-founder of Chegg who isnow chief executive of Kno,the education software com-pany, says: “In five years,tablets are going to be thedominant platform globallyfor learning, but in themeantime, laptops will stillhave to be supported.”Dan Rosensweig, Chegg’schief executive, says thatits research shows studentsuse a minimum of threedevices for learning.“While we believe tabletswill continue to grow, theymay not be the tool of choice for a student – touchis really cool and fast, butthe tablet has yet to beshown to be a really goodinput device for takinnotes,” he says.Chegg’s approach hasbeen to produce a readerbased on open HTML5standards that adapts itself to any device.“We’re open-mindedabout which device stu-dents use and we believethey will use more than onedevice and more than onevendor. Apple’s announce-ment meant content crea-tors needed to sell throughits store for its products,making it an expensiveproposition.”Kno set out to design theperfect tablet for textbooksin higher education – dem-onstrating a large-formatmodel and a dual-screenone – before opting to con-centrate on just the soft-ware, as competition in thehardware field becameheated.“We think 10in-screentablets will become ascheap as $200 to $250 withina year,” says Mr Rashid.“And in education therewill be more stylus-basedtablets – Windows 8 lookspromising in that regard – students need to be able towrite to retain informa-tion.”He sees tablets and theirsoftware as being revolu-tionary in education.“We will relearn how tolearn because of tablets;that’s how profound theimpact is going to be.”
 To dominate in class, tablets will need to let us take notes
Gadgets
Most students need to write to retaininformation.
Chris Nuttall
 looks at moves to help them
More on FT.com
Online Q&A
Online learning has areputation for beingcheap and cheerfulbut the past yearhas challengedperceptions as highquality degrees haveappeared. However,given the high pricetag, are they worth itin terms of educationand employability ofgraduates?On Wednesday March 14between 14.00 and 15.00GMT a panel of experts willanswer your questions aboutdoing an online MBA.
On the panel are:
Mark Taylor
,Dean, WarwickBusiness School
Douglas Shackelford,
Associate Dean ofMBA at UNC, Kenan-Flagler Business School
Della Bradshaw
,Business EducationEditor, Financial TimesSend your questions now toask@ft.com and they will beanswered on the day
Royal Holloway’s campus in Surrey Key stroke: Josh Koppel, chief creative officer of ScrollMotion, a developer of etextbooks, says: ‘Touch changes the intimacy of the experience’
Charlie Bibby
‘In five years,tablets will bethe dominantplatform forlearning’
college,” says Mr O’Brien.But this is a strength, hesays. “We are keen toattract people from theremotest parts of the world– not only those with thebest bandwidth.One of the beauties of our programme is that wehaven’t embedded massivefiles and multimedia,” hesays.“There’s no use having super-savvy stuff thatworks in some countriesbut not others. We can’tuse Skype, for example, asit doesn’t work in China.”
Contributors
Della Bradshaw 
Business Education Editor
Adam Palin
Business EducationResearcher
Wai Kwen Chan
Editor, MBA Newslines
Charlotte Clarke
Social Media Producer,Business Education
Chris Nuttall
Technology Correspondent
Alanna Petroff
FT Contributor
Emmanuelle Smith
Business EducationReporter
Ursula Milton
Production Editor
Steven Bird
Designer
Andy Mears
Picture EditorFor advertising contact:
Sarah Montague
on:+44 (0)207 873 4027;sarah.montague@ft.com
This means studentsreceiving instant feedbackon how they are perform-ing, through software moni-toring their progress andcomparing it with that of others.Similarly, teachers canmonitor the performance of their class more closely andtake corrective actionsooner with students hav-ing difficulties.Analytics will also helpauthors and publishersimprove their textbooks – the data feedback can showif particular sections arenot being used by teachersor students.Content creation toolsalso allow the teachersthemselves to updatecourse materials.“If I read a great story inthe Financial Times in themorning,says BradWheeler, professor of infor-mation systems at IndianaUniversity’s Kelley Schoolof Business, “I can go intothe software and find achapter, highlight a para-graph, add a web link to thearticle and say: ‘Here’s anillustration of what we weretalking about’.“I just changed every-one’s textbook, it wasn’tsome email note stripped of context, that kind of thing starts to bring the text tolife.”Mr Koppel says the poten-tial is there for many fur-ther improvements in areassuch as making educationmore social as studentshelp one another.“There’s so much therealready that’s not being used. Imagine using Face-Time or Skype video calling to change our notion of aclassroom, getting user-motivated demos andexploring social media – thenext step is to put all thesepieces together.”
‘The volatility oftoday’s careersdemands flexibilityin degrees’
 
FINANCIALTIMES
MONDAY MARCH122012
3
Business Education: Online Learning
Platforms topush a project
Below is a selection ofcrowdfunding websitesthat help people raisemoney for projects andstart-up ventures.
Kickstarter
A US-basedcrowdfunding platformwhere donors fundcreative projects, large andsmall, without receiving anequity stake.
www.kickstarter.com
Crowdcube
UK-basedwebsite that styles itself“The world’s first businessfinance crowdfundingplatform for businesses toraise equity finance.”www.crowdcube.com
Funded By Me
Platformbased in Sweden – eachproject is required toreward donors for theirdonations, whether it bewith “a hug, a CD, ticketsor a concert at theirbirthday”.www.fundedbyme.com
Cofundit
Founded byEMBA graduates from theIMD business school inLausanne, this Swisswebsite connectsbusinesses with investorsto help raise moneythrough debt offerings.www.cofundit.com
Grow VC
The Hong Kong-based Grow VentureCommunity connectsentrepreneurs with early-stage investors.www.growvc.com
SeedUps
This UK and US-platform matches techstart-ups with investors.More than £33m infunding has been raisedthrough SeedUps.www.seedups.com/
 W 
hen StephanieGetson, a UScitizen, wasworking as anintern at a UN refugeeagency in Chad, she learntabout an agricultural inno-vation that accelerated thegrowth of shea nut trees.This inspired her tolaunch Sahara Botanicals, afor-profit business that pro-duces body-care butter fromshea nuts.The company aims to“create jobs in conflict-affected communities byproducing all-natural body-care products,” she says.Ms Getson worked oncommercialising her ven-ture while studying for herMBA at the University of Oxford’s Saïd BusinessSchool.She often made presenta-tions about her businessplan and after one such, shewas approached by employ-ees from a “crowdfunding”website, who recommendedtheir fundraising platform.Buzzbnk as the site iscalled – is aimed at socialenterprises and allows vol-unteers to donate money ortime to support them. MsGetson was soon canvass-ing her friends, family andclassmates. In the end, 77people donated £3,530through Buzzbnk, helping her reach her £8,000 target.She used the funds to flyto Chad, where she pro-duced and exported her firstbatch of products.“It was a really good wayof raising the profile of theorganisation [and] it wasvery effective in raising thesmall amount of capital Ineeded,” she says.Business students areincreasingly pursuing theirown ventures, but securing funding through traditionalroutes can be a challenge.Crowdfunding presents asolution: helping entrepre-neurs raise funds while alsopromoting their projects.After Ms Getson’s suc-cess, four of her classmateslaunched their own Buzz-bnk campaign for theirstart-up mDiagnostica.They tapped classmates,friends and business con-tacts, raising £2,800 fortheir for-profit business,which aims to improvehealthcare services indeveloping nations.In this type of venture,donors give money withoutthe option to take an equitystake, because they want tosupport start-ups that havesocially responsible goals.Other business school stu-dents and graduates arecatching on to the crowd-funding trend.Joey McMahon is using crowdfunding to collectdonations and raise the pro-file of his charity, The Mon-day Life.The first-year MBA stu-dent at Duke University’sFuqua School of Businessin the US created a websitethat asks for $1 donationsevery Monday to fundimprovements at the DukeChildren’s Hospital.The crowdfunding modelencourages people to donateas well as lend their knowl-edge and expertise, he says.So far, he has raised$50,000 and plans to extendthe model to hospitals inother US cities.Adrian Johnson, an MBAalumnus of Insead, is inthe process of launching acrowdfunding website tohelp finance
The Laughter Clinic
, a film to be directedby Ed Blum, a Bafta nomi-nee.“The goal is to create asite that will, on the onehand, get the audienceinvolved in the film andbuild a fan base. [On theother hand, it will] raisesome money for the film,”says Mr Johnson.Donors will have thechance to win perks such ason-set visits and premieretickets, he says.Crowdfunding is not onlyabout financing, but alsoabout gaining support forideas, says Panagiotis Ipeir-otis, a crowdfunding spe-cialist at New York Univer-sity’s Stern School of Busi-ness.It provides entrepreneurswith “market validation”ahead of a launch, he says.“You know there isdemand, you are combining market research with rais-ing funds.”However, crowdfunding can only get a business sofar.Rules prevent small com-panies from selling equityin their business throughcrowdfunding. Therefore, itgenerally has a short shelf life.“If I did it again, I proba-bly wouldn’t use crowd-funding,” says Nigel Tunna-cliffe, one of the founders of mDiagnostica.“There were a lot of greatbenefits that we got [and] Iwas grateful to all the peo-ple who contributed. [But] Ifelt bad about asking themfor money without giving something in return ... Iwant people who contributeto our success to share inour success.”Ms Getson echoes thesesentiments, saying she willnot use crowdfunding in thefuture. “I want to getbeyond the donationroute ... to prove we are afinancially viable business.For the next round, I’d belooking for working capitalloans, eventually leading toequity investment.”
Student entrepreneurs tap their networks
Start-up finances Alanna Petroff 
on the uses and limitsof ‘crowdfunding’
‘There were a lot ofbenefits. [But] I feltbad asking formoney withoutgiving somethingin return’
Cracking idea: one MBA student used crowdfunding to commercialise her venture to produce body-care butter from African shea nut trees
Alamy
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