20,000 gum balls later, Gumball Capital initiates rising entrepreneurs at 50 schools

You have a week, $27, and 27 gum balls to create a business venture. That’s the mission of Gumball Capital’s student entrepreneur challenge, and so far it has been wildly successful, with some rising entrepreneurs generating as much as ten times a return on the initial investment.

Gumball Capital is a “startup” accelerator of sorts, encouraging students across the U.S. in high school and college to try their hand at building some kind of business venture with a seed fund of $27 and 27 gum balls. The students have a week to develop and execute the business idea and try to make some kind of return investment. Groups typically get return equal to double their original investment, but some groups have been incredibly successful, said Travis Kiefer, executive director of Gumball Capital.

“The most successful teams start on day one, compared to a lot of typical college students that wait until the last possible second to work on the venture,” Kiefer said. “Those guys, they can easily make as much as ten times their investment — we even had one group bring in $1,250.”

The business ideas can range anywhere from tried-and-true tactics, like a bake sale, to the home-run ideas that can bring in more than $1,000 off a single week’s work. Around half of the business ventures are pretty straightforward, with one or two “rock star” ideas at each school, Kiefer said. One such rock star idea involved starting a carnival on a college campus during a weekend when parents were visiting, which brought in around $700 from the original $27 investment.

Students that pass through the Gumball program in their freshman and sophomore years typically go on to find funding because it spurs them to join entrepreneurship groups on campus, Kiefer said. Some participants in Gumball Capital have also found their way to Y Combinator, which Gumball Capital is, in a way, emulating in its “seed funding” for entrepreneurial ideas.

The idea started in 2007 when one entrepreneur student at Stanford bought around 20,000 gum balls with the hope of making a little bit of an extra profit through sales, Kiefer said. After some limited success, the gum balls were eventually repurposed for an entrepreneur class challenge that eventually evolved into the gum ball challenge, including just five schools when it first launched. Since then, it’s grown to 50 schools — and should grow to around 100 schools by next spring.

Gumball Capital is still a nonprofit — all the proceeds are donated to a poverty-alleviation organization of each group’s choice. The focus on poverty alleviation, Kiefer said, actually comes from a gum ball machine.

“The idea of being able to put a quarter in and help one person get out of poverty.” Kiefer said. “The net result is all of the other gum balls get closer to the exit as well.”

[Photo: Mykl Roventine]