From little acorns

Last summer, at the end of his two- year full-time MBA course at London Business School, Richard Downs immediately took charge of a successful company - a company he set up while still studying. The business school helped to provide the capital, while the business plan and the market research were done as part of his MBA project.

He is one of a growing band of entrepreneurs who set up their companies while taking a business course. Business schools, desperate to show that they are not cloistered academic institutions, but training grounds for entrepreneurs, are encouraging their students to do course-work that could lead directly to a business start-up.

London Business School does more than most: it puts up money and provides "incubator" offices near Baker Street in which they can grow. The office units are a great boon, says Mr Downs: "The last thing you want to do when setting up a business is to sort all that stuff out."

The money comes from a pounds 2.5m trust fund backed by, among others, NatWest Bank. From this, Mr Downs had pounds 50,000 of venture capital, nearly half of what he needed, and by Christmas the business school will have put in pounds 100,000. The business school expects to sell its stake at a profit within five years to enable it to invest in new start-ups. John Bates, director of the Foundation for Entrepreneurial Management at the business school, says: "Within three years of graduating, 15 per cent of our students will be running their own business or working in an owner-managed private company."

Mr Downs's company, Iglu.com, offers an online database of more than 4,000 chalets and apartments in ski resorts. Low overheads enables Iglu.com to offer savings and fast booking.

London Business School is supporting three businesses. In the next office to Iglu.com is Dan Brown's Applied Psychology Research, which undertakes to find out what people want from their computers, and then make the computers deliver it. Further down the corridor, Regents Park Healthcare is trying to set up a private hospital for heart diseases.

A couple of miles nearer the centre of London, just off Savile Row, you can find Martin Brighty, 32, a Kingston MBA graduate. Number 6 Sackville Street is an old shopfront. On the ground floor is a military tailor dating from 1775, and on the first floor is Mr Brighty's company, the Hunters Partnership. It sells ties for about pounds 65 each. It has all the feel of an ancient establishment, but it is really that most modern of things, a virtual business. Ties are made by piece workers, and you can buy them on the internet.

Karen Jones and Julie Daniels have not yet completed their BA in accounting and finance at Bristol Business School, but their business is already well on the way to being established. They are servicing as many customers as they can, and turning others away. "It breaks my heart to turn customers away," says Ms Jones.

The business is called Small Office Services and it will look after your VAT, or your web site, your marketing or the design of your dreaded notepaper, your tax or finding temporary staff.

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