Universities Take Crowdfunding into Their Own Hands

Georgia Tech has launched a crowdfunding resource for university-based students and faculty. Originally announced in the spring, Georgia Tech joins several other universities that are using crowdfunding to finance commercialization and the development of startups based on university research. The field has become common and relevant enough that an online community has started tracking this growth.

Georgia Tech’s new crowdfunding site, Georgia Tech Starter, launched last week will allow science and engineering researchers an alternative source of funding in a time of restricted government grants. Unlike other crowdfunding services, online investors in the research will not receive any tangible rewards, although they may receive a tax deduction. In addition, the university will provide project review, administration and facility upkeep, which makes the fee paid to Georgia Tech significantly higher at 35 percent than other crowdfunding sites. Currently, only members of the Georgia Tech community can utilize Georgia Tech Starter, although this may expand in the future.

Georgia Tech is not the first university to embark on an experiment in hosting and utilizing a crowdfunding service. Arizona State University, Cornell University, and the University of Delaware have partnered with USEED to create crowdfunding portals for their researchers, and the University of Virginia opened a six-month pilot run in May with USEED. USEED was started as a vehicle for the University of Delaware to help students raise money for startups, and now works to use social media to connect donors to universities for research and student entrepreneurship.

USEED is not the only mechanism for educational institutions to utilize crowdfunding for university-based research and venture development.  The University of Utah Technology Commercialization Office partnered with RocketHub in December of last year to create a portal for crowdfunding of Utah technologies.

Launcht, another crowdfunding platform dedicated to universities and colleges, worked with the University of Vermont to create UVMStart for university-based students with an idea for a startup. Launcht also set up a crowdvoting platform for Southern Illinois University’s Saluki Idea Competition. Further, the University of Texas at Arlington is using Microryza, a science-focused crowdfunding site, to support research in areas such as fracking and children’s motor coordination; and Colorado State University ran a 30-day trial run in June, Charge, within the College of Business.

These crowdfunding programs share similar attributes – namely that eligibility is limited to those associated with the university, whether students, faculty, or alumni; and entrepreneurs using the platform must pay a fee to the service provider and/or the school.  Although some of these programs were trials, university-focused crowdfunding could be a viable alternative going forward, particularly as entrepreneurs and investors continue to wait on the SEC to create crowdfunding rules and regulations in the wake of the JOBS Act passed last year.