Jigar Majmundar, BBA ’14, has given the crowdfunding concept a competitive new twist. This fall, he and his partner, Milan Patel, launched UniSprout, an online crowdfunding platform that enables University of Michigan students to raise money for their start-up ventures by tapping into the University’s vast alumni network.
“There’s a big entrepreneurial push here at Michigan, and many students are pursuing innovative ideas for new businesses both inside and outside the classroom,” Majmundar says. “However, a number of student entrepreneurs and organizations are having trouble with seed and early-stage fundraising, in part because they are not reaching the very people who are most likely to help them ─ Michigan alumni. We decided to develop a crowdfunding website that would allow these students to connect with loyal Michigan alumni who may be potential backers.”
Majmundar began developing the business concept for UniSprout in Professor Len Middleton’s Introduction to Entrepreneurship course, a new entrepreneurial-studies offering for U-M undergraduates. During the the 2013 winter term, he worked with a student team to write and refine the company’s business plan under Middleton’s guidance. Majmundar applied for funding through the Zell Lurie Institute’s Dare to Dream program and received a $500 Mayleben Family Venture-shaping grant and a $1,500 Assessment grant to support UniSprout’s ongoing business development. He also competed in the Michigan Business Challenge, where he gained valuable insights from experienced venture capital investors.
UniSprout was officially launched in September and has raised nearly $2,000 for seven projects during its first two months in operation. Currently, the website is hosting crowdfunding campaigns for three Michigan-based ventures. These include: Wi-Detroit, which is bringing broadband Internet access to Detroit neighborhoods; ReSource Fund, which is offering financial-planning classes to low-income Ypsilanti residents; and CentriCycle, which is developing a hand-powered centrifuge for medical diagnostic testing in rural India.
U-M student entrepreneurs are able to use UniSprout’s crowdfunding platform free of charge ─ at least, for the time being. They can begin the process by submitting a written description and video about their project to UniSprout, where it is carefully reviewed. Following approval, students’ project information is posted on the website and their crowdfunding campaign is launched, usually for a period of 30 to 60 days. Alumni who wish to support a project can register on UniSprout and make cash donations via a credit card or commit other resources, such as mentoring and networking.
“Donations are channeled through a bank account we hold until the project reaches its funding deadline,” Majmundar explains. “Then the money is dispersed to the project or returned to the donors, depending upon the success of the crowdfunding campaign.” UniSprout operates as a rewards-based crowdfunding website, so it is not required to register with the Securities and Exchange Commission. While supporters may receive small thank-you gifts for their contributions, they are not awarded shares of stock. Majmundar is considering several options for monetizing UniSprout in the future, including charging a small fee for its crowdfunding service or franchising its business model at other universities.
The University of Michigan is the ideal place to launch and grow UniSprout, Majmudar says. “We have lots of students with great entrepreneurial ideas and a strong alumni base that is willing to help them pursue new ventures,” he explains. “It’s the perfect blend for success.”