While still finishing their studies at LSU, Leo Zhao and Bin Yu thought they had an idea for the Next Big Thing: LED clothing.
To help convert their vision into profits, they turned to a then-budding program at the Louisiana Business & Technology Center: the LSU Student Incubator.
Coaches at the incubator worked with the pair to explore market demographics, develop a business and marketing plan, and craft a financial model. In the end, they reached this conclusion: LED sales? Great idea. LED clothing? Not so good.
So in 2010, Zhao and Yu founded HitLights, offering sustainable and affordable LED bulbs, lamps, flexible strips, flashlights and 12-volt car LEDs. The company has since graduated from the LSU Student Incubator into the Louisiana Business & Technology Center, moved into larger offices with warehouse storage, and hired 10 employees. HitLights now has its own manufacturing facility in China, and some 50 U.S. distributors currently carry its products.
UPS and FedEx are making two stops daily to retrieve the mound of LED-stuffed boxes awaiting shipping at the company’s front door. HitLights has already outgrown its second location and has plans to hire four more employees once it secures room for them. The company was recently recognized as one of Amazon’s Top 25% Holiday Vendors.
“A lot of students may be interested in starting a business, but then they see how much it’s going to cost for space and equipment, and it’s just not possible for a student,” Zhao says. “They back up and say, ‘It’s too early to talk about a business. But there is no best time to start a business. The student incubator helped us a lot with those startup costs by providing space and opportunities for networking and mentors for $25 a month—the cost of a nice dinner. It made our business possible.”
Welcome to the LSU Student Incubator. This isn’t the kind of place for those who want to finish their degree, get a few decades of experience in the workforce and dream about maybe, one day, owning their own business. It’s for future CEOs who are ready to launch right now, while they’re still dining in the Student Union and studying for finals.
The student incubator got its start through the Louisiana Business & Technology Center, a 25-year-old entity that enhances economic development in the state by supporting existing small businesses and helping to develop new ones. In May 2009 a group of soon-to-be graduates without jobs came to LBTC, looking for help in turning a student project into a company. That firm was the advertising agency Red Six Media.
“After we had this experience, we started talking,” says LBTC Executive Director Charles D’Agostino. “We knew there had to be hundreds of kids on campus that were either starting a business, have a business they’re running, or have the desire to start a business. It just took off like wildfire.”
At the time, only an elite few campuses across the country—Stanford University, Harvard University and Massachusetts Institute of Technology—had student incubators on which LSU might model its program. LBTC developed a program from the ground up tailored to student needs, which are different from traditional incubator clients.
In less than three years, the incubator has already helped launch 17 companies that continue operating today. Twenty-nine LSU students or recent graduates are now running their own businesses and have hired 63 additional employees, creating a total of 92 new direct jobs in the state. Since its beginnings, the incubator has helped raise nearly $2.3 million in capital and is now recognized as a leader in the student business incubation industry.
Currently, 31 newly emerging LSU student-owned businesses are participating in the incubator. They include Frosted, a modernized gourmet cupcakery that is ready to branch out with a contemporary cupcake truck and cutting-edge vending machines; Econofy, which provides outlet-level control electricity monitoring accessible from anywhere; RockWater, a doctor-formulated drink designed to aid in kidney stone prevention; 225Apartments.com, an online real-estate locator; and Ties to the South, high-quality apparel that “captures the essence and gentility of southern culture,” including hand-sewn bow ties.
The incubator’s goal is to guide emerging entrepreneurs in creating a sustainable business model without acquiring massive debt. Applicants who are accepted into the LSU Student Incubator benefit from coaching by professional consultants on business practices, planning, marketing and financial modeling. Incubator events include Entrepreneurship Roundtables, Mock Investor Pitch Night, the Elevator Pitch Competition, and workshops by proven entrepreneurs with expertise on strategic planning, legal issues, finance, marketing, accounting and operations. Volunteers from the business community and the LBTC advisory board serve as mentors to the students.
“The business community has been very responsive,” D’Agostino says. “When you mention that these are students, it gets the volunteers really energized. We had no shortage of volunteers who want to come out and be mentors or give a one-hour program on taxes or patent laws—whatever it may be.”
Incubator companies have affordable access to 1,200 square feet of shared workspace with desktop computers and other equipment, wireless Internet access, a 50-inch television and audio video equipment for presentations, conference rooms with Smart Board and videoconference capabilities, packaging and shipping services, and a professional receptionist.
Once a year, the incubator offers the Venture Challenge, a competition judged by community business leaders that awards $25,000 in seed capital to four student businesses. The money is contributed by corporate sponsors, some of whom are alumni of the program.
LSU Student Incubator Director Jennifer Fowler notes that the program isn’t just geared for College of Business students. Current participants are students in agribusiness, veterinary medicine, apparel and merchandising, accounting, landscape architecture, geography, oceanography, mechanical engineering, petroleum engineering, psychology and philosophy.
“There are entrepreneurs in every [discipline],” she says. “Often times we have students who come through the program who say, ‘I didn’t even think of myself as an entrepreneur. I just thought, well, I love doing this—maybe it’s app developments. It’s what I’m going to school for and it’s what I do on the weekends, but I never thought of myself as being able to start a business around that and have employees.’ But now those students are graduating with a full-time business already up and running.”
Besides fostering economic development, the LSU Student Incubator has an added benefit for Louisiana: doing its part to stem the exodus of promising young graduates to other states. All 17 companies that have graduated from the program and are still in business today remain in Louisiana—16 of them in Baton Rouge, one in New Orleans.
“You’ve heard all the politicians and the administration at the university say over and over again, ‘We want to stop the brain drain,” D’Agostino says. “We educate these kids and there are no jobs here, so they go to Houston, Dallas, Atlanta, wherever. This is a small hit on that, but basically what we’re doing is getting these students to start businesses anywhere from freshman year through graduate school, so on graduation day, instead of interviewing, they’ve already got their business and they hire other students who they’ve already worked with. So we’re keeping some of these people here.”
In some instances, the LSU Student Incubator is even attracting promising young entrepreneurs to Louisiana.
Memphis native Louis Ashner, who has been buying and selling things since the age of 9, enrolled in LSU partly with a view to participating in the student incubator. In high school, he stumbled upon a promising business model when he discovered he could sell his old cell phone for more money than he’d originally paid for a new one. When he started researching southern colleges with entrepreneurship programs, the incubator helped convince him to come to Baton Rouge.
Although he’s just a sophomore, his company, Side Street Technology, has already graduated from the student incubator into the LBTC. He has three full-time employees and $276,000 in revenue so far this year, all of which he manages while carrying a full course load. The capital he’s bringing in he plans to use to fund other business ventures he’s pondering.
“What [the incubator] did was give me space—I was in my dorm for a whole year doing it,” says Ashner, who plans to keep his company in Baton Rouge. “I needed to have more space so I could hire employees, and they gave it to me pretty cheap. One thing the incubator has helped me with is they’ve given me connections. That has helped more than anything.”
Those responsible for launching the LSU Student Incubator say even they never anticipated just how successful it would be. In less than three years, the program is close to having assisted 100 emerging firms. Other universities—like Southern Illinois University, Texas State University, Sam Houston State and California Polytechnic State University—are now using LSU’s incubator as a model for their own.
“We had no clue it would take off like it has,” D’Agostino. “And we had no clue that these companies would actually take off and launch and grow that fast.”
For more information about the program, go to studentincubator.lsu.edu.
