A Financial Backer When a Parent’s Wallet Isn’t an Option

David C. Croson, professor of strategy in SMU's Cox School of Business, talks about a new website that pairs young entrepreneurs with investors.

By Paul Sullivan

Shefali Kumar Friesen set out to create an app to allow people to send sound clips, like music or speeches or poems, as text messages. She wanted the app, called Emotitones, to have a vast digital library that would allow people to search for clips by name but also by sounds, like something to inspire or apologize.

Without venture backing and unwilling to ask her family for help, she used money from her day job as a music composer and singer to pay people to create the app, a process she found frustrating.

Then, last summer, after introducing the app in early 2012, she realized she needed to rewrite all the code herself. The only problem was she didn’t know how to do it or have the money to learn.

That was when she stumbled upon a new site called Upstart that pairs investors and people who finished college or graduate school after 2008. The Upstarts, as they are called, are looking for relatively small amounts of money, about $25,000 on average, to finance their idea or even pay off debt....

David Croson, a professor of entrepreneurship at the Cox School of Business at Southern Methodist University, said he had invested $100 to $10,000 in about two dozen young entrepreneurs over the last month through Upstart. He did so after talking to his wife, also a business professor, about how hard it was for young entrepreneurs to get started....