Even though startups have become increasingly popular, with 320 new entrepreneurs out of 100,000 adults in 2011, they are still risky endeavors. Numbers vary, but a 2012 study by Shikhar Ghosh, a senior lecturer at Harvard Business School, indicated that three out of every four startups fail to return funds to their investors. Others estimate that the rate of failure is closer to 90 percent—or even higher.
For students who want to establish a startup, college rarely shows them how to get started, says Kathrina Manalac, a partner and outreach coordinator at Y Combinator. Y Combinator is a San Francisco-based startup incubator that provides seed funding to early-career entrepreneurs. "The best way to learn [how to run a startup] is to do it," Manalac said. "It’s really difficult to do while you’re in school because of the time commitment they both require."
Judith Scott-Clayton, a professor of economics and education at Columbia University’s Teachers College, thinks that more people should be going to college overall.* But she agrees that incurring the financial burden of college isn’t worth taking on if the student is occupied with a new business. "It’s like exercise," she said. "More people should exercise, absolutely—the data is very compelling. But that doesn’t mean you should pay a whole bunch of money for a gym membership you won’t use. College is similar in this way—you have to have buy-in on the part of the person doing the investing."
Occasionally, a college student comes up with an epoch-making idea at exactly the right time, pushing school down on the list of priorities. "I imagine if you have some really awesome idea, time is really important," Scott-Clayton said. "If you wait four years, someone else could have that idea." If you’re a creative person, she added, you would probably have more ideas down the line. But sometimes those ideas just can’t wait. And without many financial responsibilities, Manalac added, young startup mavens are able to channel all their energy into a project—and even take risks—that older entrepreneurs may find unpalatable.
Manalac has seen some of these pressing ideas first-hand—and many of them have come from students who are still in high school. The youngest person ever funded through Y Combinator was 17 at the time, and students as young as 14 have applied. Still, making it big is very rare: "I’ve met one or two people who have dropped out of high school because they were making enough money on projects they were working on, but that’s still very uncommon," Manalac said. And even if they’re successful, most of these entrepreneurs aren’t prepared to run a startup at such a young age.
And that’s where Y Combinator comes in."Y Combinator was originally formed to help young entrepreneurs who were facing credibility issues and couldn’t be taken seriously by investors," Manalac said.